Threshold For VAT Registration: Step-by-Step How-To for Making Tax Digital Clients

Crossing the threshold for VAT registration is only the start. You must register with HMRC within 30 days of the end of the month you went over £90,000, and then you keep digital records and file returns through compatible software. This guide walks Uber, Bolt and private hire drivers through that sequence, step by step, for 2026/27.

It does not re-explain how the threshold is calculated. If you still need to work out whether you have crossed it, read our complete guide to the threshold for VAT registration first, then come back here for the practical steps.

Many drivers also hear about Making Tax Digital (MTD) for Income Tax in the same breath. They are two separate systems with different rules, and a driver can be caught by both. We cover how they sit side by side near the end.

Key takeaways

• Register for VAT within 30 days of the end of the month in which your taxable turnover passed £90,000, or earlier if you expect to pass it in the next 30 days.
• HMRC signs VAT-registered businesses up to Making Tax Digital for VAT, so you no longer sign up yourself. You still need software that works with it.
• You must keep your VAT records digitally and send each return through compatible software, usually every 3 months.
• Making Tax Digital for Income Tax is a separate system. From 6 April 2026 it applies if your self-employment and property income is over £50,000.

What is the threshold for VAT registration?

The threshold for VAT registration is the amount of taxable turnover that forces you to register for VAT. According to HMRC's guidance on registering for VAT, it is £90,000 over the last 12 months, or an expected £90,000 within the next 30 days.

What changes once you cross the threshold?

Once you cross the threshold you must register, charge VAT on your fares from your effective date, and report to HMRC through software. Your day-to-day bookkeeping also changes because you now track VAT on every fare and every business cost. The steps below put these jobs in order.

Most drivers are used to one yearly Self Assessment return. VAT adds a second, much more frequent cycle: usually four returns a year, each with its own deadline. Planning for that rhythm early is the difference between a calm first quarter and a rushed one.

The step-by-step sequence at a glance

Here is the whole process in order. The sections after this list explain each step in plain English, with the dates and documents you need.

1. Confirm the date you crossed £90,000 and write it down.
2. Gather the details HMRC asks for, then register for VAT online.
3. Note your effective date of registration and start charging VAT from it.
4. Understand how Making Tax Digital for VAT applies to you.
5. Choose software that works with Making Tax Digital for VAT.
6. Set up digital records for fares, costs and VAT.
7. Decide whether a VAT scheme such as the Flat Rate Scheme suits you.
8. Prepare, check and file your first VAT return, and pay on time.

Step 1: How do you confirm the date you crossed the threshold?

Add up your taxable turnover for each rolling 12-month period and find the month it first went over £90,000. That month sets your registration deadline and your effective date. Use your Uber, Bolt or other platform statements and any direct bookings, because all taxable fares count towards turnover.

Write the date in your records with the figures behind it. If HMRC ever queries the timing, a clear working is your best protection. Our VAT calculator can help you check the numbers, and the guide linked in our introduction explains the rolling test in full.

Remember that turnover means takings before costs. Fuel, insurance and car costs do not reduce the figure you compare with the threshold. Platform commission also needs care, so ask us if your statements are unclear.

Step 2: How do you register for VAT online?

You register through GOV.UK using a Government Gateway sign-in, which you can create the first time you use the service. You do not have to finish in one go, because you can save your entry and return later. Registration itself carries no fee.

According to HMRC's guidance on how to register for VAT, an individual needs the following:

• your National Insurance number
• an identity document such as a passport or driving licence
• your bank account details
• your Unique Taxpayer Reference (UTR), if you have one
• details of your annual turnover and an estimate of taxable turnover for the next 12 months

A limited company needs its company registration number, bank details and UTR instead. If you want to apply for a registration exception because your turnover rose only temporarily, HMRC says you must register by post using form VAT1. You can also appoint an accountant as your agent to handle this for you.

Our separate guide to VAT registration for Uber drivers covers the form itself in more depth, so this article stays focused on what happens afterwards.

Step 3: What is your effective date and what must you do from it?

Your effective date of registration is normally the first day of the second month after you went over the threshold. From that date you must pay HMRC the VAT due on your sales, even if your VAT number has not yet arrived in the post.

HMRC says you cannot show VAT on invoices until you hold your VAT number. In the meantime you can raise your prices to cover the VAT you will owe. For a driver on a platform, the practical effect is that your net takings fall by the VAT portion of each fare unless pricing changes, so plan your cash flow carefully.

Once you register, HMRC sends a 9-digit VAT registration number, your effective date and your first return and payment dates. This arrives by post, so keep an eye on your mail and your Business Tax Account.

You must also sign up for a VAT online account as soon as you receive your number. If you use an accountant as your agent, you can still create the account when your number arrives.

Step 4: How does Making Tax Digital for VAT apply to you?

Making Tax Digital for VAT means keeping VAT records digitally and sending returns through compatible software. HMRC's guidance states that all VAT-registered businesses should now be signed up, and you no longer need to sign up yourself. HMRC signs you up after registration unless you are exempt.

The key point is that you cannot simply type figures into an online form. Your software must connect to HMRC and send the return for you. The official Making Tax Digital for VAT guidance is the page to check for the latest rules, because details around software and exemptions can change.

An exemption is possible in limited cases, where HMRC accepts that using digital tools is not reasonably practical. If you think that applies, apply to HMRC first and do not simply ignore the rules.

Step 5: How do you choose software that works with MTD?

Choose software that HMRC lists as compatible with Making Tax Digital for VAT, keeps your records digitally and sends returns directly to HMRC. Then check it fits how a driver works: importing platform statements, capturing receipts on your phone and splitting business from personal costs.

We do not recommend or link to any particular product here, because the best choice depends on your situation. Use this checklist when comparing options:

• It appears on HMRC's list of software that works with Making Tax Digital for VAT.
• It can import or easily record your platform earnings statements.
• It lets you attach receipts and invoices as digital records.
• It supports your chosen VAT scheme, for example standard accounting or the Flat Rate Scheme.
• It can handle MTD for Income Tax later, so you do not pay for two systems.
• It lets an accountant access your records as your agent.

If you already use a spreadsheet, ask whether the file can be linked to compatible software. Our guide to Making Tax Digital for Uber drivers explains how digital records work in practice, and our Making Tax Digital service can set it up for you.

Step 6: What digital VAT records must you keep?

You must keep your VAT records digitally and hold them for 6 years. HMRC's guidance on VAT record keeping says invoices must show your VAT number and display VAT separately, and that you must record each transaction in your VAT account.

For a driver, the records usually fall into a few groups. Keep them in one place and update them weekly rather than at quarter end.

• Fares and platform earnings, with the VAT charged on each.
• Receipts for vehicle costs where you can reclaim VAT, such as repairs and servicing.
• Invoices for business purchases, with the supplier's VAT shown.
• Your VAT account, which summarises VAT charged and VAT reclaimed.
• Copies of every submitted VAT return and payment confirmation.

Not every cost carries reclaimable VAT. Some vehicle costs have special rules, so if you are unsure whether a cost qualifies, ask us before you claim it. For more on keeping tidy books alongside VAT, see our VAT bookkeeping guide.

Step 7: Should you use the Flat Rate Scheme?

The Flat Rate Scheme lets you pay HMRC a fixed percentage of your turnover instead of working out VAT charged minus VAT reclaimed. It suits some drivers and not others, so compare both ways using your own figures before you apply.

According to HMRC's guidance on the VAT Flat Rate Scheme, you may qualify if your VAT taxable turnover is £150,000 or less, excluding VAT. Under the scheme you cannot reclaim VAT on purchases, apart from a limited exception for capital assets over £2,000. Many drivers have significant vehicle costs, so losing the right to reclaim can matter.

There is also a special rate for a limited cost business, and HMRC has tests for when it applies. Check the current rules on GOV.UK rather than relying on a rule of thumb, and apply to HMRC formally if you choose the scheme.

Comparing the two main ways to account for VAT

Step 8: How do you file your first VAT return?

You file your first VAT return through your compatible software, normally covering a 3-month accounting period. HMRC's guidance on VAT Returns says the deadline is usually one calendar month and 7 days after the end of the period, and the same deadline applies to payment.

Even if you have no VAT to pay or reclaim, you must still file a return. Your registration letter and online account show your exact dates, so diarise them as soon as they arrive. Our key tax dates guide helps you place VAT deadlines next to your Self Assessment dates.

Before you press submit, work through this short routine:

1. Confirm all fares for the period are recorded, including any direct bookings.
2. Check each purchase with VAT has a valid invoice or receipt.
3. Reconcile your VAT account to the figures in the software.
4. Review the totals on screen and look for anything odd.
5. Submit through the software before the deadline.
6. Pay HMRC so the money arrives by the same deadline.
7. Save the submission receipt in your records.

Illustrative example: a driver's first VAT quarter

This is an illustrative example using invented figures for a private hire driver. It is not a forecast, and your own numbers will differ.

The driver's taxable turnover passes £90,000 during March 2027. They register by 30 April 2027, and their effective date is 1 May 2027, the first day of the second month after crossing. HMRC assigns an accounting period of 1 May 2027 to 31 July 2027.

In that quarter the driver's fares excluding VAT total £24,000, so VAT charged at 20% is £4,800. They also paid £6,000 of vehicle repairs and other costs excluding VAT, with £1,200 of reclaimable VAT on valid invoices. Under standard accounting, the VAT due is £4,800 minus £1,200, which is £3,600.

The period ends on 31 July 2027, so one calendar month and 7 days later is 7 September 2027. That is the deadline to file and for the payment to reach HMRC. The driver should set aside roughly £1,200 a month towards VAT, because the £3,600 is not their money.

The takeaway is the cash effect. Until prices change, the driver's takings fall by the VAT element, and the quarter's VAT bill arrives as a lump sum.

How does Making Tax Digital for Income Tax sit alongside VAT?

Making Tax Digital for Income Tax is a separate system from VAT. VAT affects your business turnover; Income Tax affects your personal tax reporting. Under HMRC's rules you can be required to use both, each with its own software link, records and deadlines.

According to HMRC's guidance on signing up for Making Tax Digital for Income Tax, you need to use it from 6 April 2026 if your total annual income from self-employment and property is over £50,000. Qualifying income is your income before expenses, based on the tax return you submitted in the previous year.

The government has set the limit to fall to £30,000 from April 2027 and £20,000 from April 2028. That is worth knowing, because a driver who has just crossed the VAT threshold is usually earning well above these levels.

HMRC also says that from September 2026 it will start signing up anyone who needs to use Making Tax Digital for Income Tax for 2026 to 2027 and has not signed up. HMRC will not apply penalty points for late quarterly updates in the first year, but penalties still apply for late returns and late payment.

In practice, using one set of software for both systems saves duplicated effort. Our guide to Self Assessment versus Making Tax Digital explains the difference in more detail.

Common mistakes and the penalty each triggers

Most problems come from timing and record keeping rather than complicated tax law. Here are the mistakes we see most, and what each can trigger.

• Registering late: you owe VAT on sales since the date you should have registered, and HMRC says a penalty may apply depending on how much you owe and how late you are.
• Filing late or paying late: HMRC can apply penalties and interest, so check the current rules on GOV.UK and diarise every deadline.
• Using the wrong software or a spreadsheet with no digital link: your return may not meet Making Tax Digital rules.
• Not telling HMRC about changes within 30 days, such as a new address or agent: HMRC says you might need to pay a penalty.
• Reclaiming VAT on costs without a valid invoice: HMRC can reject the claim and may charge a penalty for the error.
• Treating VAT collected as your own income: the money builds up, and a surprise bill can cause a cash crunch.

If HMRC disputes a figure or opens an enquiry, get professional representation before replying.

Key terms

• VAT: Value Added Tax, charged on most goods and services.
• MTD: Making Tax Digital, HMRC's system for digital records and software filing.
• UTR: Unique Taxpayer Reference, the 10-digit number HMRC gives for Self Assessment.
• PHV: private hire vehicle, such as an Uber or Bolt car.
• Taxable turnover: your VAT-able takings before costs are deducted.
• Effective date of registration: the date you must start accounting for VAT.
• Input VAT and output VAT: VAT you pay on costs and VAT you charge on sales.

How Uber Driver Accountant helps

We are an independent accountancy practice that works only with drivers and has no connection with Uber or Bolt. Our fixed fees start from £20 a month, so you know the cost before the first return is due. See our pricing for the current plans.

Our VAT service covers registration, scheme advice and returns. We also help clients stay on top of the wider deadlines that come with growing earnings, so you meet each date without learning the system alone.

Ready to register for VAT and get MTD set up

If you have crossed £90,000, or you are close, do not wait for the 30-day deadline to loom. Contact us and we will confirm your dates, set up your records and file your first return with you.

Last reviewed 6 October 2026 by the Uber Driver Accountant tax team.

This article is general information and is not personal tax advice. Speak to a qualified accountant about your own circumstances, and get professional representation if HMRC disputes a figure or charges a penalty.