AI agents for business finance: what they can and can't do
What AI agents can do in bookkeeping, close, collections and compliance today, where a person must stay in charge, and how to judge a product.
The short answer
A UK business must register for VAT when its taxable turnover over the last 12 months goes over £90,000, or when it expects to go over £90,000 in the next 30 days alone. Under the 12-month test you register within 30 days of the end of the month you went over, and registration takes effect on the first day of the second month after. Below the threshold you can register voluntarily.
For a new business the VAT threshold is less a single line than a running check you make every month. HMRC does not look at your tax year or your company's accounting year; it looks at a rolling window. This guide explains the two tests, the dates that follow, and when registering early makes sense. It reflects GOV.UK's 'When to register' page, which was updated in September 2026.
Test 1: the last 12 months
GOV.UK says you must register if your total taxable turnover for the last 12 months goes over £90,000. Taxable turnover means your sales that are not exempt from VAT; GOV.UK's page explains what to include. 'The last 12 months' is any rolling 12-month period, not the calendar year, so at the end of each month add up the previous 12.
- Deadline
- Register within 30 days of the end of the month when you went over the threshold.
- Effective date
- The first day of the second month after you go over. From that date you charge VAT and account for it.
Example: a catering business crossing in June
| Date | What happens |
|---|---|
| End of June 2026 | Rolling 12-month taxable turnover reaches £91,200 (example figure) |
| By 30 July 2026 | Register with HMRC (30 days after the end of June) |
| 1 August 2026 | Effective date of registration: VAT applies to sales from here |
GOV.UK says that if you register late, you must pay VAT on any sales you have made since the date you should have registered, and you might have to pay a penalty depending on how much you owe and how late you are. Because you did not charge customers that VAT, it comes out of your margin.
Test 2: the next 30 days
GOV.UK says you must also register if you expect your taxable turnover to go over £90,000 in the next 30 days alone. This catches a business that wins a single large contract or order. You have to register by the end of that 30-day period, and the effective date is the date you realised you would go over, not the date you actually did.
Registering voluntarily below £90,000
GOV.UK says you can choose to register if your turnover is less than £90,000. Whether it suits you depends on who your customers are.
| Your situation | Effect of registering early |
|---|---|
| You sell mainly to VAT-registered businesses | They reclaim the VAT you charge, so your price is not really higher, and you reclaim VAT on your own costs. |
| You sell mainly to the public | Your prices rise by the VAT you must add, or your margin falls by the same amount. |
| Your sales are zero-rated | You charge no VAT on those sales but can reclaim VAT on costs, which can make registration worth it. |
| You want to look established to larger clients | Some buyers prefer VAT-registered suppliers, but this is a commercial choice, not a rule. |
Exports matter for diaspora businesses, because goods sent abroad can qualify for zero-rating when the conditions and evidence rules are met; see zero-rating VAT on exports to Nigeria.
What changes once you are registered
From the effective date your business becomes a collector of VAT for HMRC. In practice that means:
- Your invoices show your VAT number and the VAT charged on each supply.
- You file VAT returns for each period and pay what you collected, minus the VAT you can reclaim on business costs.
- You keep records that support every figure on the return.
- Your cash flow changes: VAT collected is not your money, so set it aside rather than spending it.
Many new businesses open a separate pot or account for VAT and move the VAT part of each payment into it as it arrives, so the quarterly bill never comes as a shock.
What to set up before you cross
- Run the rolling 12-month total at each month end, from your first month of trading.
- Watch for a single order large enough to trigger the 30-day test.
- Decide how you will price after registration: add VAT on top, or absorb it.
- Make sure your invoices can show VAT correctly; see invoicing.
- Use bookkeeping software that can produce your VAT figures each period.
- If you are changing from sole trader to company, read turning a sole trade into a limited company first, because the registration may need to move.
If you also run a business in Nigeria, its VAT rules are separate. The Nigerian test is explained in when a business must register for VAT in Nigeria.
Where Pryme fits
The Finance agent that comes with a Pryme Business Account can keep a running total of sales so the rolling 12-month figure is visible each month, and prepare the numbers for a person to check. It does not file VAT returns for you. This page is general information, not tax advice.
Questions people ask
What is the VAT threshold in the UK in 2026?
£90,000 of taxable turnover over a rolling 12 months, according to GOV.UK's 'When to register' page (updated September 2026).
Is the VAT threshold based on the tax year?
No. It is any rolling 12-month period. Check the total at the end of every month.
When do I have to register after going over £90,000?
Within 30 days of the end of the month you went over. Registration takes effect from the first day of the second month after.
Can a new business register for VAT voluntarily?
Yes. GOV.UK says you can register below £90,000. It tends to suit businesses selling to VAT-registered customers or making zero-rated sales.
Sources
- GOV.UK: Register for VAT - When to register · accessed Oct 2026
- GOV.UK: Register for VAT · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.