Threshold for VAT Registration: Checklist for Drivers With a Second CIS Trade

The threshold for VAT registration is £90,000 of taxable turnover in any rolling 12 months, and HMRC tests it against you as a person, not against each separate trade. If you drive for a living and also take subcontract building work under the Construction Industry Scheme (CIS), every sole-trade sale goes into one total, counted at gross invoice value before any CIS deduction.

This is a working checklist, not a general explainer. It is laid out in six parts you can print and tick each month, from setting up your records to rewriting your subcontractor invoices once you are registered. If you want the full seven-step registration walk-through for CIS income, read our VAT registration requirements guide for drivers with CIS income alongside this page.

Key takeaways

• One person, one total: driving and construction income earned as a sole trader are added together and measured against a single £90,000 limit.
• Use gross figures for CIS work. The 20% or 30% the contractor keeps is an advance payment of your tax, so it never reduces your turnover.
• Whether your driving fares count towards VAT turnover depends on your contractual model with the app operator, so get that settled before you rely on any total.
• Once registered, invoices to VAT-registered contractors who report under CIS usually switch to the domestic reverse charge. Invoices to homeowners do not.
• CIS deductions and VAT are separate taxes with separate returns. One never pays the other.

What is the threshold for VAT registration?

The threshold for VAT registration is the turnover level at which you must register with HMRC: £90,000 of taxable sales in the last 12 months, or an expectation of passing £90,000 in the next 30 days alone. It measures sales, not profit, and covers everything you sell as one person.

Key terms

• Taxable turnover: the value of your sales that are not exempt from VAT or outside its scope, measured excluding VAT.
• CIS (Construction Industry Scheme): HMRC's scheme under which contractors deduct tax from payments to subcontractors for construction work.
• Domestic reverse charge: a rule that makes a VAT-registered customer, rather than you, account for the VAT on certain construction services.
• End user: a VAT-registered customer who buys construction services for its own use rather than to sell them on. HMRC defines this in its reverse charge manual.
• Effective date of registration: the date from which you must account for VAT on your sales.
• MTD (Making Tax Digital): HMRC's requirement for VAT-registered businesses to keep digital records and file VAT returns through compatible software.
• UTR (Unique Taxpayer Reference): your 10-digit Self Assessment reference, also used for CIS.

Does the VAT threshold apply to each trade or to you as a person?

It applies to you as a person. HMRC registers individuals, not activities, so a sole trader who drives and plasters has one combined turnover figure and, once over the limit, one VAT registration covering both. You cannot hold a separate VAT number for each trade while you remain a sole trader in both.

HMRC's VAT registration manual on sole proprietors states that the sole proprietor is the natural person who is registered. Elsewhere the same manual treats a second entry for the same person as a duplicate to be removed. In practice that means your driving and your construction work share one number, one VAT return and one set of VAT records.

Drivers often assume the trades are tested separately because they file two sets of figures on Self Assessment. That split is for income tax. For VAT, the question is simply: what did this individual sell in the last 12 months?

Which figure do you use for CIS work: gross or net?

Use the gross invoice value, excluding VAT, before the contractor makes the CIS deduction. The deduction is tax collected in advance on your behalf, not a reduction in what you charged. If you invoice £2,500 and receive £2,000, your turnover from that job is £2,500.

According to GOV.UK's guidance for CIS subcontractors, contractors deduct 20% from registered subcontractors and 30% from unregistered ones, and those deductions count as advance payments towards your tax and National Insurance bill. HMRC's CIS manual on calculating the deduction confirms the deduction is worked out on the payment exclusive of VAT, and does not apply to the part that covers materials.

That second point matters for your checklist. Materials you supply and invoice escape the CIS deduction, but they are still your sales. Add them to your turnover total in full.

Do driving fares count towards the threshold for VAT registration?

It depends on who legally supplies the journey to the passenger under your app operator's terms, and that model has changed over time. We do not state a single position here. Our VAT guide for ride-hailing drivers explains the factors, and you should check current guidance on GOV.UK or ask us to review your terms.

What this checklist does insist on is that you decide the point before you add up your totals. A driver who wrongly leaves fares out, or wrongly puts them in, will get the threshold date wrong in either direction. Our complete guide to the VAT threshold covers how commission and gross fares are treated in more depth.

The second-trade checklist for the threshold for VAT registration

Work through Part A once, Part B every month, and Parts C to F when they become relevant. Each item is a yes or no check, so print it and tick it.

Part A: set-up checks (do once)

• Confirm both trades are run by you personally as a sole trader. If either runs through a limited company, test that company on its own.
• Confirm your CIS registration, so contractors deduct 20% rather than 30%.
• Write down, with your accountant, whether your driving fares count as your taxable turnover under your app operator's current terms.
• Set up one spreadsheet or software file with separate columns for driving income, CIS gross labour, CIS materials, CIS deduction and CIS net received.
• Keep every CIS payment and deduction statement your contractors send you, filed by month.

Part B: monthly threshold check (numbered steps)

1. At each month end, enter the driving turnover for the month on the basis agreed in Part A.
2. Enter every construction invoice at its ex-VAT gross value, splitting labour and materials. Do not use the bank deposit figure.
3. Add back the CIS deduction shown on each statement, and check that net received plus deduction equals the labour you invoiced.
4. Add the last 12 complete months together for both trades. This is your rolling total for the threshold for VAT registration.
5. Compare it with £90,000. If you are above roughly £75,000, look ahead at signed jobs and expected fares for the next few months.
6. Ask the forward question as well, because the threshold for VAT registration has a second test: will sales in the next 30 days alone exceed £90,000? If yes, you must register by the end of those 30 days.
7. Save a dated copy of the month's calculation. It is your evidence of when you crossed, or that you did not.

Part C: the month you cross

• Note the month in which the rolling total went over £90,000.
• Diary your registration deadline: 30 days after the end of that month, according to GOV.UK's register for VAT guidance.
• Diary your effective date: the first day of the second month after you crossed.
• Register as one sole trader and describe both activities, driving and construction, on the application.
• From the effective date, start pricing new work knowing VAT may apply. Our VAT registration how-to covers the online form.

Part D: re-template your CIS invoices

• For each contractor, check whether they are VAT registered and whether they report your payments under CIS.
• Ask each contractor whether they are an end user or intermediary supplier, and keep any written confirmation they give you.
• Where the reverse charge applies, add a line such as 'reverse charge: Customer to pay the VAT to HMRC' and show the VAT for information only, not in the total due.
• Where it does not apply, for example a homeowner, charge VAT in the normal way at the correct rate.
• Keep labour and materials as separate lines so the contractor can calculate the CIS deduction correctly.

Part E: driving-side checks

• Confirm how VAT applies to your fares under your operator's terms now that you are registered.
• Keep VAT invoices for business costs on the car, such as servicing and tyres, and record the business use percentage.
• Do not reclaim VAT on purchases without a valid VAT invoice.

Part F: quarterly and year-end checks

• File each VAT return through Making Tax Digital software. Our MTD for VAT step-by-step guide explains the set-up.
• Report reverse-charge sales on your VAT return the way the software and HMRC's technical guide require, and check the treatment before your first return.
• At year end, reconcile CIS deductions claimed on Self Assessment against your statements. They belong on that return, never on your VAT return.
• If turnover drops sharply, check the current deregistration threshold on GOV.UK before cancelling.

How should you treat each type of customer once registered?

Treat each customer according to two facts: are they VAT registered, and is your payment reported under CIS? If both are true and they have not told you in writing that they are an end user or intermediary supplier, use the reverse charge. Otherwise charge VAT normally. This decision table, which we built for clients with mixed customers, sets it out.

The conditions come from GOV.UK's guidance for suppliers of building and construction services. It says the reverse charge applies when you and your customer are both VAT registered in the UK, payment is reported within CIS, the services are standard or reduced rated, and the customer has not confirmed in writing that it is an end user or intermediary supplier.

Illustrative example: a driver-plasterer crossing in October 2026

This illustrative example uses invented figures for a driver we will call Rhys, who drives evenings and weekends and plasters for two contractors on weekdays. His accountant has confirmed the basis on which his fares count. Rhys is not a real client.

At the end of October 2026, Rhys's gross total is £90,900, so he crossed the threshold for VAT registration in October. His bank view still looks £7,620 short of the line, because his contractors have kept 20% of his labour as CIS deductions. Judged on deposits alone, he would carry on unregistered.

Following the pattern in GOV.UK's own example, Rhys must register by 30 November 2026, and his effective date is 1 December 2026. The forward test did not catch him earlier, because no single 30-day period was ever expected to bring in £90,000 on its own.

In December 2026 Rhys invoices his main contractor £3,000 of plastering labour. The contractor is VAT registered and reports under CIS, so his invoice shows the reverse charge wording and notes VAT of £600 for information, but the total due stays £3,000. The contractor then deducts 20% CIS, £600, and pays him £2,400.

Two £600 figures appear on that one job, and they are completely different. The VAT £600 is accounted for by the contractor through its own VAT return. The CIS £600 is an advance payment of Rhys's income tax and National Insurance, which he claims on his Self Assessment return. Neither cancels the other. Our VAT calculator is handy for checking the VAT figure on an invoice like this.

How does the reverse charge change a subcontractor invoice?

Under the reverse charge you still issue a full VAT invoice, but you do not add VAT to the amount due. The invoice must say the reverse charge applies and that the customer accounts for the VAT. The customer pays you the net price and handles the VAT on its own return.

HMRC's reverse charge manual page on invoices says no exact wording is prescribed, but the invoice must include the term reverse charge. Its examples include a reference to section 55A of the VAT Act 1994, or a plain statement that the customer pays the VAT to HMRC. The VAT should be shown, but not included in the total VAT charged.

There is one more rule worth knowing. Where the reverse charge element of a contract is 5% or less of its total value, HMRC's manual on minor reverse charge elements allows it to be disregarded, but only if supplier and customer agree from the start. Most labour-only plastering contracts will not fall into this category.

Are CIS deductions the same as VAT?

No. A CIS deduction is income tax and National Insurance collected in advance by your contractor. VAT is a tax on your sales. They run on different returns, different deadlines and different calculations, and a CIS refund never reduces a VAT bill. Keep them in separate columns from day one.

HMRC's own reverse charge manual says the reverse charge borrows its scope from CIS but is not part of CIS. That is the cleanest way to hold it in your head: CIS decides whether the reverse charge can apply, but the money flows never merge. Our HMRC CIS returns FAQ for drivers explains how deductions are reclaimed through Self Assessment.

What if one of your trades runs through a limited company?

A limited company is a separate legal person, so its sales are tested against the threshold on their own and are not added to your sole-trade total. But HMRC can challenge a split it sees as artificial. Take advice before restructuring with VAT in mind, and see our limited company VAT FAQ.

Threshold for VAT registration: common mistakes and the penalty each one triggers

• Testing each trade separately against £90,000. Result: late registration, and you must pay VAT on sales made since the date you should have registered.
• Using bank deposits instead of gross CIS invoices. Result: the same backdated VAT, often on construction income where you charged no VAT to the customer.
• Leaving invoiced materials out of turnover because no CIS was deducted. Result: an understated total and a later crossing date than the true one.
• Adding VAT to an invoice that should be reverse charged. Result: the contractor may refuse it, and you will need to issue a corrected invoice.
• Treating CIS deductions as VAT already paid. Result: an unpaid VAT liability, which can bring interest and penalties (check the current rules on GOV.UK).
• Assuming a fares position without checking your operator's terms. Result: the wrong crossing date in either direction.

On late registration, GOV.UK says you must pay VAT on sales since the date you should have registered and may face a penalty depending on how much you owe and how late you are. Check the current penalty rules on GOV.UK if this applies to you, and get professional representation where HMRC has opened an enquiry.

How UK Driver Accountants helps

We work only with drivers, on fixed fees from £20 a month, and we are independent of any ride-hailing app. For clients with construction income, our CIS returns service reconciles every payment and deduction statement, rebuilds your gross turnover, and tracks your combined total against the threshold each month. If you cross, our VAT service handles registration, invoice templates and MTD returns. See our pricing for what each plan includes.

Conclusion

If you drive and work under CIS, the threshold for VAT registration applies to the combined, gross value of everything you sell as a sole trader. Run the monthly check in Part B, decide your fares position in writing, and re-template your construction invoices before your effective date. For a review of your figures, contact UK Driver Accountants and we will tell you where you stand.

Last reviewed 2 November 2026 by the UK Driver Accountants tax team.

This article is general information and not personal tax advice. Your position depends on your contracts, customers and records, so speak to a qualified accountant before acting. Where HMRC disputes, enquiries or penalties are involved, we recommend professional representation.