The VAT threshold: what window cleaners need to know

The VAT threshold is the line every growing window cleaning round bumps into sooner or later. Go over it and you either add 20% to every customer’s bill or take it out of your own pocket. Here’s how it works in plain English, and how to see it coming months ahead instead of weeks.

A quick word first: this is a plain-English guide, not tax advice. The rules live on GOV.UK, and once you’re getting close, an accountant who knows your numbers is money well spent.

What the VAT threshold is

You must register for VAT if your VAT-taxable turnover goes over £90,000 in any rolling 12-month period. You also have to register if you expect to go over £90,000 in the next 30 days alone. That’s the whole test, but two words in it catch people out: “rolling” and “turnover”.

Rolling 12 months, not the tax year

The VAT threshold has nothing to do with the April to April tax year. At the end of every month, you add up your turnover for the last 12 months. If that total is over £90,000, you’ve gone over, even if your last tax year came in well under.

So a busy spring and summer can tip you over halfway through the year, and your tax return won’t warn you, because it looks at a different 12 months.

Here’s how the rolling total moves, with example numbers (use your own). Say your last 12 months to the end of October add up to £86,000. This November you take £8,000, and last November you took £6,000, so the new total is £88,000. This December you take £7,500 against £4,500 last December, and the total is now £91,000. You went over in December, so the clock starts at the end of December.

The deadline to register

You must register within 30 days of the end of the month in which you went over. If your rolling total crosses the line during March, for example, you have 30 days from the end of March to register. GOV.UK explains what happens after that, including when you start charging VAT.

The 30-day rule

The second test is whether you expect your turnover in the next 30 days alone to go over £90,000. For a normal domestic round that’s very unlikely, but keep it in mind if you ever take on another business or a very large contract in one go.

What counts as turnover

Turnover is your gross takings: every pound customers pay you for the work, before you take off fuel, the van, wages, insurance or anything else. It isn’t profit. A round can go over the line while the owner takes home a fraction of that figure.

For a window cleaner, that means counting everything you charge for through the business:

• Domestic window cleans, however customers pay.
• Commercial contracts and one-off jobs.
• Add-ons like gutters, fascias and conservatory roofs.
• Cash, which is the easiest bit to forget and the hardest to explain later.

If you run more than one business as a sole trader, or you’re in a partnership, ask an accountant how the figures add up. It isn’t always obvious.

Do window cleaners charge VAT?

Only once they’re registered. If you’re under the threshold and haven’t registered, you don’t charge VAT and your invoices shouldn’t show any. Once you are registered, VAT goes on your cleans at the standard rate, which is 20%, and you pass it on to HMRC.

That’s one reason two cleaners on the same street can charge different prices for the same house. One might be VAT registered and the other not, and the customer usually has no idea.

What registering does to your prices

Once you’re registered, you’ve got two choices, and plenty of people end up somewhere in between.

Pass it on

Add 20% and keep your earnings the same. Household customers can’t reclaim VAT, so to them it’s simply a price rise. Give plenty of notice and explain why. Short and honest works best. If you can, line it up with your yearly price review, so customers get one change rather than two in the same year.

Absorb it

Keep prices where they are and earn less from every clean. It avoids an awkward conversation, but it’s a pay cut that sticks until you raise prices later.

Commercial customers

Many business customers are VAT registered themselves and can usually reclaim the VAT you charge, so for them it often makes little difference.

VAT registration for a window cleaner under the threshold

You can register voluntarily before you reach £90,000. People do it for a few reasons:

• You can usually reclaim the VAT you pay on business costs, such as kit and equipment.
• If most of your work is commercial, those customers can often reclaim the VAT you charge.
• You’re close to the line anyway and want to set it up on your own timetable.

The catch is that domestic customers can’t reclaim anything. For a round that’s mostly households, registering early means a price rise or a pay cut, plus VAT returns to keep on top of. Run the numbers with an accountant before you decide, because the answer depends on your costs and your customers.

Keep an eye on the rolling figure every month

The best way to handle VAT is to see it coming. It takes ten minutes a month:

1. At the start of each month, add up your takings for the previous 12 months.
2. Write that figure down next to last month’s, so you can see which way it’s heading.
3. Look ahead at the work you’ve booked: new customers, price rises, a new contract, or a round you’re thinking of buying.
4. Set yourself a warning line well below £90,000 (for example £80,000, but pick your own) so you’ve got months to plan, not days.
5. When you cross your warning line, book time with an accountant.

If you’re growing by buying work, add the new customers’ regular takings to your forecast before you agree anything. Chris covers the buying side in Window cleaning rounds for sale.

Zifty’s reports show your takings month by month and a 12-month forecast from the work you’ve booked, which makes the rolling figure easy to keep an eye on. To be clear, it doesn’t work out VAT for you. That’s still a job for you and your accountant.

Records to keep

• Every invoice and payment, cash included, recorded on the day.
• Receipts for business costs.
• Bank statements, ideally from a separate business account.
• Your rolling 12-month total for each month, so you can show when you crossed any line.

Good records make price changes easier to plan too. If registering means a rise, there’s more on setting prices properly in how to price window cleaning jobs.

Mistakes that catch people out

• Checking the tax year instead of the rolling 12 months.
• Looking at profit when the test is turnover.
• Forgetting cash, one-off jobs and add-ons.
• Only adding it up once a year, so the month you go over slips past.
• Springing a 20% rise on customers with no notice once registration lands.

Going the other way: the deregistration threshold

The deregistration threshold is £88,000. If your VAT-taxable turnover drops below that, you can ask to cancel your registration. GOV.UK sets out how it works, and it’s one to talk through with your accountant before you do anything.

How Zifty does it

Reports & targets

See what your round is worth: a 12-month forecast from booked work, profit after costs, collection rates and money targets that tell you if you’re on track.

See how it works →

We’re letting UK window cleaners into Zifty a few at a time. Add your name to the waitlist and you’ll get early bird pricing when your turn comes.