What income counts towards the VAT threshold in the UK?

Understanding the VAT threshold and why “what counts” matters

If you run a business in the UK, the VAT threshold can feel like a bright line that suddenly changes the way you operate. One minute you’re issuing invoices without VAT, and the next you’re required to register, charge VAT on taxable supplies, keep VAT records, and file VAT Returns. The most common confusion is not the threshold number itself, but what income counts towards it. Is it all money that comes in? Is it profit? Does it include grants, deposits, or sales to customers outside the UK? What about postage, tips, or selling an old laptop from the office?

In UK VAT law, the VAT registration threshold is based on the value of your taxable turnover, not your total income and not your profit. “Taxable turnover” has a specific meaning: it is the total value of supplies you make that are taxable at the standard rate, reduced rate, or zero rate, measured on a rolling 12-month basis. That definition immediately rules some things in and rules other things out. Understanding those boundaries helps you avoid accidental late registration and also stops you registering earlier than necessary.

This article explains what counts towards the VAT threshold in the UK in practical terms: which sales and charges you include, which you exclude, how to treat mixed activities (taxable, exempt, and outside the scope), and how to handle the awkward edge cases that often trip people up.

Key concept: the threshold is based on taxable turnover, not profit or “cash in the bank”

It’s tempting to assume the VAT threshold is based on whatever hits your bank account. But VAT doesn’t work like income tax. The registration test looks at your turnover from taxable supplies, usually measured by the value of invoices (or the value of sales you make) rather than the timing of payments. Even if a customer hasn’t paid yet, the supply may still count towards the threshold when it is made.

Likewise, profit is irrelevant. A business can be loss-making and still exceed the VAT threshold if its taxable turnover is high enough. Conversely, a highly profitable business with low turnover can remain below the threshold.

For most businesses, the question becomes: “Which of my sales are taxable supplies for VAT purposes?” Once you can answer that, you can total the values correctly and monitor your rolling 12-month turnover.

What “taxable supplies” means for threshold purposes

For VAT threshold calculations, taxable turnover includes the value of supplies that are:

• Standard-rated (currently charged with VAT at the standard rate)
• Reduced-rated (charged at a reduced VAT rate for certain supplies)
• Zero-rated (taxable, but the VAT rate is 0%)

The crucial point is that zero-rated sales still count because they are still “taxable supplies” even though the VAT charged is 0%. This surprises many people because “zero-rated” sounds like it might be treated as “no VAT at all,” but it is different from “exempt” and “outside the scope.”

So, if you sell goods that are zero-rated (for example, certain food items or children’s clothing), the value of those sales generally counts towards your VAT threshold in the same way as standard-rated sales.

Sales that count: common examples of taxable turnover

Most everyday business income is part of taxable turnover. The following commonly count towards the VAT threshold (assuming you are making the supply as part of a business in the UK):

1) Sales of goods and products

If you sell physical products, the value of the goods you supply usually counts. This includes:

• Retail and online sales (whether you sell through your own website, marketplaces, or in person)

• Wholesale sales to other businesses

• Made-to-order products and custom items

• Subscription boxes and recurring shipments

The value to include is generally the amount you charge your customer for the goods (excluding any VAT if you are already VAT-registered; but for threshold calculations, if you are not yet registered, you consider the gross amount charged).

2) Fees for services

Service businesses often have simpler turnover: the fees you invoice for your services count. This includes:

• Consulting fees and professional services

• Agency retainers

• Hourly or day-rate work

• Fixed-price projects

• Maintenance, support, or managed services

• Training and coaching (subject to the VAT treatment of the specific service)

Even if you have not been paid yet, the service you have supplied can count depending on when the supply is treated as taking place for VAT purposes.

3) Digital services and downloads

Digital products and services can be taxable supplies too, including:

• Software subscriptions

• App sales

• Online courses (depending on their structure and VAT treatment)

• E-books and downloads

• Paid membership content

The location of your customer can affect whether the supply is treated as made in the UK or abroad, but the underlying principle remains: if it is a taxable supply made in the UK, it is included in taxable turnover.

4) Commission income and brokerage

If you earn commission—say, as an introducer, broker, or affiliate—what counts is the commission you charge (or are entitled to) for the service. That commission is generally your taxable turnover, not the entire value of the sale you facilitated for someone else.

For example, if you refer a customer to a supplier and earn £200 commission, it is typically the £200 that counts in your turnover, not the customer’s £5,000 purchase from the supplier. Where things can get complicated is when you act as a principal (selling in your own name) versus an agent (selling on behalf of someone else). The contractual position and invoicing arrangements matter.

5) Delivery, shipping, and postage charged to customers

If you charge customers separately for delivery, shipping, handling, packaging, or postage, these charges are usually part of the value of your supply. In other words, they normally count towards taxable turnover.

Many businesses treat postage as a “pass-through” cost, but from a VAT standpoint, delivery charges are often ancillary to the main supply. That means they take the VAT treatment of the main supply and are included in the value you use for threshold calculations.

6) Deposits, advance payments, and prepayments

Deposits and advance payments can count, but it depends on what they are for and whether they are refundable.

• Non-refundable deposits that are part payment for a taxable supply generally count when you receive them or when the supply takes place (depending on the VAT timing rules).

• Advance payments for goods or services you will supply later often count at the time you receive the payment, because VAT may become due when payment is received in advance.

• Fully refundable security deposits that are genuinely held as security and are expected to be returned may not be treated as consideration for a supply at the time you receive them. If the deposit later becomes forfeited and kept as payment, it may then become part of taxable turnover.

In practical terms: if the money is being paid to you as consideration for something you will supply, you should assume it counts unless it is clearly a security deposit that remains refundable and separate from the price.

7) Charges for cancellation, no-shows, and late fees

Cancellations and no-show fees can be tricky. Some charges are treated as compensation (outside the scope) and some are treated as consideration for a supply (taxable). The distinction depends on what the charge represents in reality.

If the fee is effectively part of the price for making a service available, or it is connected to the supply in a way that resembles payment for a supply, it is more likely to be treated as taxable turnover. If it is genuinely compensation for a breach of contract, it may be outside the scope. Because this area can be fact-specific, many businesses take professional advice when cancellation fees become a material part of their revenue.

For threshold monitoring, if you routinely charge cancellation or late fees as part of your trading model, you should pay careful attention to how you describe them contractually and how they function commercially.

8) Sale of business assets (sometimes)

When you sell business assets, the proceeds may count towards taxable turnover if the sale is a taxable supply. For example:

• Selling equipment (computers, tools, machinery) can be a taxable supply

• Selling a company car may be taxable depending on circumstances

• Selling stock or trading inventory is clearly taxable turnover

However, there are exceptions and special rules. Some asset disposals may be exempt or outside the scope. If you sell a significant asset and it pushes you over the threshold, it’s important to check whether it is a taxable supply and whether any special VAT treatment applies.

Income that does NOT count: exempt supplies and outside-the-scope income

Not everything a business receives is included in taxable turnover for VAT threshold purposes. The main categories that usually do not count are:

• Exempt supplies
• Outside-the-scope income
• Certain one-off or special-case transactions

Exempt supplies: common examples

Exempt supplies are not taxable supplies, which means their value is generally excluded from taxable turnover when calculating whether you must register. Importantly, exempt does not mean “zero-rated.” Exempt is a separate category.

Common areas where exempt supplies arise include:

• Certain financial services (for example, some credit-related services, arranging certain financial products, and some insurance-related services)

• Residential rent and certain property-related supplies (often exempt, though property VAT is a complex subject with exceptions such as opting to tax)

• Certain health and welfare services

• Certain education and training supplies provided under specific conditions

• Some cultural services supplied by eligible bodies

Even if exempt income does not count towards the VAT threshold, it still matters for other VAT purposes, especially if you are already VAT-registered. Exempt supplies can restrict your ability to reclaim input VAT, and they can influence whether you should voluntarily register.

Outside the scope: money received that isn’t for a VAT supply

“Outside the scope” means the transaction is not a supply for VAT purposes, or it is not within the scope of UK VAT (for example, because it happens entirely outside the UK VAT system). Outside-the-scope items are generally not included in taxable turnover.

Examples can include:

• Grants and donations where nothing is supplied in return (i.e., no direct benefit to the payer that constitutes consideration for a supply)

• Pure compensation payments for damages (not linked to a supply)

• Dividends and certain investment income

• Funds injected by the owner (capital introduced)

• Loan proceeds (borrowing is not turnover)

• Certain disbursements that meet strict criteria (explained later)

A helpful test is: “Is this payment made in return for a good or service I supply?” If the answer is no, there is a good chance it is outside the scope. But if you provide something specific in return—access, advertising, a report, membership benefits, tickets, or branding—then it may be consideration for a supply and potentially taxable.

Zero-rated vs exempt vs outside-the-scope: why the labels matter for the threshold

Because the words sound similar in everyday speech, it’s worth nailing down the practical difference:

• Zero-rated: counts towards the VAT threshold because it is still a taxable supply, just taxed at 0%.

• Exempt: generally does not count towards the VAT threshold because it is not a taxable supply.

• Outside the scope: generally does not count because it is not within the VAT system (or not a supply).

If you remember only one thing, make it this: zero-rated counts; exempt usually doesn’t.

VAT threshold calculations are based on a rolling 12-month period

VAT registration is not measured neatly by tax year or calendar year. The usual test looks at your taxable turnover in the previous 12 months on a rolling basis. That means every month you should (ideally) total your taxable turnover for the last 12 months and see whether you have crossed the threshold.

Because it rolls, you can cross the threshold at any time, even if your annual accounts show something different. Businesses with seasonal sales, large one-off contracts, or rapid growth often get caught out because they only check at year-end.

There is also a forward-looking test: if you expect your taxable turnover to exceed the threshold in the next 30 days alone (for example, you sign a contract that will generate a large taxable invoice), you may have to register immediately based on that expectation. This is separate from the rolling 12-month test.

VAT “turnover” is normally based on the value of supplies, not the VAT-inclusive amount

When you are already VAT-registered, your taxable turnover is usually the value of sales excluding VAT, because VAT is a tax you collect on behalf of HMRC rather than income you keep. For threshold purposes, most businesses approaching the threshold are not yet registered, so they typically look at the gross amounts they charge customers (as there is no VAT element yet). Conceptually, the threshold is about the value of the supplies themselves.

If you are monitoring turnover while unregistered and you quote prices to customers, you generally treat those prices as the value of the supply. If you later register and must treat earlier quoted prices as VAT-inclusive (because you can’t easily re-invoice customers for VAT), the transition can be painful. That is one reason many businesses consider registering slightly earlier, especially if their customers are VAT-registered and can recover VAT.

What about income from outside the UK? Exports, overseas customers, and place-of-supply issues

One of the biggest sources of confusion is cross-border sales. Whether a sale counts towards the UK VAT threshold depends on whether it is a supply made in the UK for VAT purposes. The UK VAT rules include “place of supply” principles that determine where a supply takes place.

Exports of goods (selling goods to customers outside the UK)

If you sell goods and ship them outside the UK, those sales may be zero-rated if conditions are met. Remember: zero-rated supplies are taxable supplies, so they can still count towards your taxable turnover for threshold purposes if they are treated as UK supplies that are zero-rated.

However, the VAT treatment of exporting goods can depend on your customer’s location (for example, whether they are outside the UK), the evidence you keep, and the route the goods take. The practical takeaway is that “export” does not automatically mean “doesn’t count.” Many exports are zero-rated and therefore still count.

Services to overseas customers

For services, the place of supply can move outside the UK depending on the nature of the service and whether your customer is a business or consumer. Some services supplied to overseas business customers may be treated as supplied where the customer belongs, which could put them outside the scope of UK VAT. If a service is outside the scope of UK VAT because its place of supply is outside the UK, its value would typically not be included in UK taxable turnover for the UK VAT registration threshold.

This is where accurate classification matters. If a large part of your income comes from overseas clients, you may be below the UK VAT threshold even with high total income—if those services are outside the scope of UK VAT. But you should be careful: not all services follow the same place-of-supply rule, and digital services to consumers can have their own complications.

Sales through online platforms and marketplaces

If you sell through a marketplace, you may see money come in and money go out in ways that blur what you are actually supplying. Fees charged by the platform are usually a cost to you. Your taxable turnover is usually the value of what you supply to the customer (or to the platform, depending on the legal structure of the transaction). The platform’s commission is not a reduction in your turnover; it is an expense. So you generally count the full sale value, not just what you receive after fees.

Some marketplaces act as the deemed supplier for VAT purposes in certain cross-border scenarios. If the platform is legally treated as the supplier to the customer, your supply may instead be to the platform. The effect on your threshold can vary depending on the arrangement. If your sales channels are complex or international, it’s worth mapping the supply chain carefully rather than relying on bank statements.

Mixed businesses: when some income counts and some doesn’t

Many businesses do more than one thing. For example:

• A therapist who also sells books and digital courses

• A landlord who also runs a property management service

• A gym that offers membership (taxable) and also sublets space (possibly exempt depending on the arrangement)

• A charity that receives donations (outside the scope) and sells merchandise (taxable)

In mixed businesses, you must separate your income streams into VAT categories:

Taxable (standard/reduced/zero-rated) → included in threshold turnover

Exempt → excluded from threshold turnover

Outside the scope → excluded from threshold turnover

The discipline is to do this categorisation consistently, ideally in your bookkeeping system, so that threshold monitoring becomes a simple report rather than a monthly detective story.

Tips, service charges, and gratuities: do they count?

Whether tips count towards taxable turnover depends on how they are handled:

• Optional tips that customers freely give and that are not required as part of the price may be outside the scope in some situations, especially if the customer has discretion and the business is merely distributing them.

• Mandatory service charges or fixed gratuities added to bills are more likely to be treated as consideration for the supply and therefore taxable.

• Tronc arrangements and how tips are collected and distributed can also affect treatment.

For threshold purposes, if tips are processed by the business and form part of what customers must pay, they are more likely to count. If they are truly voluntary and handled as a separate flow, they may not. Hospitality businesses should be particularly careful because tip handling can materially affect turnover.

Disbursements vs recharges: when “passing on costs” doesn’t mean “excluding income”

Businesses often pay costs on behalf of clients and then invoice the client to recover them. Many people assume these amounts can be excluded from turnover because the business is “just passing through” the cost. In VAT terms, most of these are not disbursements; they are recharges.

Recharges (usually count)

If you incur a cost as part of providing your service—travel, accommodation, subcontractors, materials—and you then charge the client for it, that is usually part of the consideration for your supply. It typically counts towards taxable turnover.

True disbursements (can be excluded, but only if strict conditions are met)

A true disbursement is where you pay something on your customer’s behalf to a third party and the supply is made directly to the customer, not to you. You act as an agent for the customer in paying it. In those cases, the amount may be excluded from your turnover and invoiced separately as a disbursement.

However, this is narrowly defined in practice. Many “expenses” do not qualify. If you label something a disbursement incorrectly and exclude it from turnover, you risk understating your taxable turnover for threshold purposes.

Grants, sponsorship, and funding: when does it count?

Grants and funding are a common area of VAT confusion, especially for charities, social enterprises, and research-oriented businesses.

Grants (often outside the scope, but not always)

If you receive grant funding and you are not providing anything specific in return to the grantor—no advertising, no deliverables, no services—then the grant may be outside the scope and not count towards taxable turnover.

But if the “grant” is actually payment for delivering a service (for example, providing training to a target group under a funded programme) then it may be consideration for a supply. In that case it could be taxable (or sometimes exempt) depending on the nature of the supply, and it may count towards your threshold if taxable.

Sponsorship (often counts)

Sponsorship frequently involves benefits to the sponsor: branding, advertising, promotion, tickets, access, naming rights. If you provide those benefits, sponsorship income is often consideration for a supply and can be taxable turnover. If it is taxable, it counts towards the VAT threshold.

Membership subscriptions and donations: are members buying something?

Membership income can be a blend of donation-like support and tangible benefits. The VAT position depends on what the member receives:

• If membership gives access to services, content, events, discounts, or facilities, it is likely consideration for a supply. That income may be taxable and count towards the threshold.

• If payments are genuinely voluntary and give no material benefits, they may be outside the scope as donations.

In practice, even small benefits can change the analysis, particularly if the membership is marketed as a product with defined entitlements.

Insurance payouts, refunds, and rebates: do these count as turnover?

Not all cash inflows are sales. Some common receipts are usually not turnover:

• Insurance claims: Often compensation for loss and not consideration for a supply, so they are commonly outside the scope and not included in taxable turnover.

• Refunds from suppliers: If you return goods and receive a refund, that is not your turnover; it is a reduction in your costs. If you receive a credit note for your own purchases, it does not form part of your sales turnover.

• Rebates: Trade rebates can be treated as discounts or adjustments rather than turnover. But if you are receiving payments for performing promotional services for a supplier, what looks like a “rebate” may in reality be payment for a service, which could be taxable.

As always, the substance matters more than the label.

Intercompany transactions and connected parties: do they count?

If you supply goods or services to connected parties—another company you own, a family business, or a related entity—those supplies can still be taxable supplies if made in the course of business. The value of those supplies can count towards your taxable turnover for threshold purposes, even if you set internal prices or settle via bookkeeping entries rather than cash payments.

This is especially relevant for groups of small businesses that try to “split” activities across entities. Artificial separation can create VAT risks. Even where separation is commercially genuine, transactions between the entities can still be supplies for VAT purposes and may count towards each entity’s threshold.

One-off sales and unusual income: the “exceptional item” myth

Some people believe one-off income can be ignored for VAT threshold purposes. That is not generally true. If it is a taxable supply, it can count, even if it is unusual or non-recurring. A single large taxable contract can push you over the threshold.

That said, there are specific rules and reliefs that can apply in limited circumstances, and there can be nuances with the sale of capital assets or the transfer of a going concern. But it is risky to assume that “one-off” equals “doesn’t count.” The safer approach is to treat taxable supplies as included unless you have a clear VAT reason for exclusion.

How to calculate taxable turnover for threshold monitoring

To work out what income counts, you need a repeatable method. Here is a practical process many small businesses use:

Step 1: List all income streams

Include everything: sales, services, commissions, grants, sponsorship, rent, tips, and any other receipts. Don’t filter yet.

Step 2: Categorise each stream as taxable, exempt, or outside the scope

Be consistent. If one income stream contains mixed elements (for example, a package that includes both taxable and exempt components), note that you may need to apportion.

Step 3: Include all standard-rated, reduced-rated, and zero-rated values

Add them up for the relevant period. Remember that zero-rated still counts.

Step 4: Exclude exempt and outside-the-scope items

Do not include these in your taxable turnover total for threshold purposes.

Step 5: Use a rolling 12-month window

Every month, total your taxable turnover for the last 12 months. If you exceed the threshold, you may have a registration obligation.

Step 6: Watch for the 30-day expectation rule

If you know you will exceed the threshold in the next 30 days alone (for example, a big invoice is scheduled), you may need to register based on that expectation even if your rolling 12-month total hasn’t yet exceeded the threshold.

Common pitfalls that lead to incorrect threshold calculations

Even diligent business owners make mistakes when the categories blur. These are some of the most common pitfalls:

Confusing total income with taxable turnover

Including loans, owner capital introduced, insurance payouts, or grants that are not consideration for supplies can inflate your turnover calculation and cause unnecessary panic.

Ignoring zero-rated sales

Some businesses think zero-rated means “not relevant.” It is relevant. If your business mainly sells zero-rated goods, you can still be required to register even though you might charge VAT at 0% on those sales. Registration may even be beneficial if it allows you to reclaim input VAT on costs (subject to the normal rules).

Forgetting delivery charges and “extras”

Delivery, packaging, administration fees, and similar add-ons often form part of taxable turnover. If you only monitor “product line” totals and ignore these, you might underestimate.

Misclassifying recharges as disbursements

Calling an expense a disbursement does not make it one. Most recharged costs are part of your taxable supply and count towards turnover.

Not monitoring monthly

Because the test is rolling, annual reviews can miss the point when you cross the line. Monthly monitoring is safer, especially in growth phases.

Assuming overseas income never counts

Some overseas sales do count (for example, many exports can be zero-rated and still taxable supplies). Some overseas services may be outside the scope. You need the correct category, not a blanket assumption.

How VAT registration can affect pricing and contracts

When you register, you may need to add VAT to your prices. If your customers are consumers or non-VAT-registered businesses, that can make you less competitive if you increase prices. If your customers are VAT-registered businesses, they can often recover VAT, so registration may have less impact on net cost.

Knowing what counts towards the threshold helps you plan: you can update contracts, clarify whether prices are VAT-inclusive or VAT-exclusive, and prepare systems and invoices before registration becomes mandatory.

Voluntary registration: even if you’re below the threshold, taxable turnover still matters

You can usually register voluntarily even if you are below the threshold. Businesses choose voluntary registration for many reasons:

• To reclaim VAT on costs (especially start-up costs and equipment)

• To appear larger or more established to business customers

• Because their customers are VAT-registered and won’t mind VAT being added

• Because they expect to exceed the threshold soon and want a smoother transition

Even if you register voluntarily, you still need to understand what counts as taxable turnover so you can apply the correct VAT treatment to your supplies and manage compliance correctly.

Practical examples: what counts towards the VAT threshold?

Example 1: A consultant with a side income from residential rent

A consultant earns £70,000 a year from consultancy services and £25,000 from renting out a flat. Consultancy services are typically taxable, while residential rent is commonly exempt. For VAT threshold purposes, the consultant’s taxable turnover is based on the consultancy fees (and any other taxable income), not the residential rent. The rent does not usually count towards the VAT registration threshold because it is exempt, but it can affect the ability to reclaim VAT if the consultant registers.

Example 2: An online seller of zero-rated goods

A business sells mainly zero-rated items and reaches a large volume of sales. Even though the goods may be zero-rated, the sales are taxable supplies, so they count towards the VAT threshold. The business may have to register, and once registered may charge VAT at 0% on those items, while potentially reclaiming VAT on packaging, professional fees, and other costs.

Example 3: A charity receiving donations and selling merchandise

A charity receives £120,000 in donations and sells £40,000 of merchandise. Donations that give donors no material benefit are often outside the scope and do not count towards taxable turnover. Merchandise sales are typically taxable and do count. For threshold purposes, the charity monitors the taxable turnover from merchandise (and any other taxable activities), not the donation income.

Example 4: A designer who invoices travel as “expenses”

A designer bills clients £60,000 for design work and recharges £10,000 of travel and accommodation costs. Unless the travel costs are true disbursements (which is uncommon), the recharge is usually part of the designer’s taxable supply and counts towards taxable turnover. So the designer’s taxable turnover may be £70,000 rather than £60,000.

Example 5: A software developer with overseas business clients

A developer sells services to UK businesses and overseas businesses. Some services supplied to overseas business customers may be outside the scope of UK VAT because the place of supply is where the customer belongs. If so, that overseas income may not count towards the UK VAT threshold. But the UK client income does count if taxable. The developer should categorise each income stream carefully and keep evidence of customer status and location.

Record-keeping: how to track what counts without overcomplicating your bookkeeping

You do not need an elaborate system to monitor threshold turnover, but you do need consistency. Many businesses use bookkeeping categories such as:

• VAT taxable sales (standard/reduced)
• VAT zero-rated sales
• VAT exempt income
• Outside-the-scope income

Then, each month, you run a report for the last 12 months of “VAT taxable sales” plus “VAT zero-rated sales.” That combined figure is the core number you compare to the threshold.

If you have income that changes VAT treatment depending on circumstances (for example, services to UK vs non-UK customers), create subcategories to keep the trail clear. This also makes it easier if you later register and need clean VAT reporting.

What to do if you think you are close to (or over) the threshold

If your taxable turnover is approaching the threshold, it is worth taking deliberate steps:

• Monitor monthly using a rolling 12-month calculation

• Review your VAT categories for each income stream to ensure you are including the right items and excluding the right items

• Check contracts and pricing so you understand whether prices are VAT-inclusive or VAT-exclusive

• Prepare your invoicing and accounting so you can add VAT correctly if required

• Consider professional advice for complex areas such as property, financial services, mixed supplies, international services, and grants/sponsorship

Late registration can create real costs: you may have to account for VAT on past sales, sometimes without being able to recover it from customers. Getting the “what counts” question right is therefore not just a compliance issue; it can be a cash flow issue.

Summary: what income counts towards the VAT threshold in the UK?

In the UK, the VAT registration threshold is based on your taxable turnover in a rolling 12-month period. Taxable turnover includes the value of supplies that are standard-rated, reduced-rated, and zero-rated. It commonly includes your sales of goods, service fees, commissions, delivery charges, many deposits and prepayments, and many cost recharges to clients.

Income that generally does not count includes exempt supplies (such as many residential rents and certain financial or education-related supplies) and outside-the-scope receipts (such as loans, capital introduced, many donations, and some compensation payments). International income can be included or excluded depending on whether the supply is treated as made in the UK for VAT purposes, so overseas customers do not automatically mean “outside the threshold.”

The practical approach is to list your income streams, categorise each one correctly, include standard/reduced/zero-rated values, exclude exempt and outside-the-scope items, and monitor your rolling 12-month taxable turnover monthly. That keeps you on top of registration obligations and helps you plan pricing and processes before VAT becomes mandatory.