Last updated: 14 October 2026
Do you have to pay VAT if you are self-employed?
Only if your VAT-taxable turnover goes over the £90,000 registration threshold in any rolling 12 months, or you register voluntarily. Being self-employed doesn’t by itself mean you charge VAT. Most sole traders with turnover under £90,000 don’t register, so they don’t charge VAT and can’t reclaim it. You pay income tax and National Insurance on your profits whether or not you are VAT-registered.
VAT vs income tax for sole traders
| Tax | When it applies |
| Income tax | On profits over your £12,570 Personal Allowance |
| Class 4 NIC | 6% on profits between £12,570 and £50,270, and 2% above |
| VAT | Only if you are registered: charged on your sales and reclaimed on your costs |
How the threshold test works
Check your taxable turnover at the end of every month:
- Looking back: if your turnover in the last 12 months is over £90,000, register within 30 days of the end of that month
- Looking forward: if you expect turnover over £90,000 in the next 30 days alone, register straight away
Turnover means sales, not profit. Exempt sales don’t count. Zero-rated sales do.
Should you register voluntarily?
Voluntary registration can make sense if:
- your customers are mainly VAT-registered businesses, which can reclaim the VAT you charge
- you have high start-up costs with VAT to reclaim
- you sell zero-rated goods and would receive VAT refunds
It’s usually a disadvantage if your customers are consumers, because your prices go up by 20% or your margin falls.
Example
A self-employed web designer earns £70,000 a year, mainly from businesses. If she registers voluntarily, she charges £14,000 VAT, which her clients reclaim, and she reclaims about £1,500 VAT on her laptop and software. A wedding photographer with £70,000 of sales to couples would usually stay unregistered.
After registration
- Charge VAT on your invoices and show your VAT number
- File VAT returns quarterly using MTD software
- Consider the flat rate scheme if your turnover is £150,000 or less
- Your VAT registration covers all of your sole trader businesses. See VAT for a second business
Common mistakes for self-employed people
Many people don’t track turnover month by month and only realise they have passed the £90,000 registration threshold after it’s too late. Late registration means paying the VAT you should have charged out of your own pocket. Check your rolling 12-month turnover at the end of each month. If you expect to cross the threshold within the next 30 days, you must register by the end of that 30-day period.
A further example
A self-employed gardener’s turnover reaches £91,000 over the last 12 months at the end of July. He must register by 30 August, and VAT applies from 1 September.
Frequently asked questions
Do I need to register for VAT when I start as a sole trader?
No. Only when you go over the threshold, or if you choose to.
Is the threshold the same for limited companies?
Yes, £90,000.
If I am not VAT-registered, can I show VAT on my invoices?
No. Only VAT-registered businesses can charge VAT.
Does my rental income count?
Residential rent is exempt, so it doesn’t count.
Related: how to register for VAT and sole trader tax returns.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with VAT for the self-employed. See our sole trader accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
