Most of what a livestock farm sells is zero-rated, which is exactly why farmers get caught out by the VAT threshold. Zero-rated is not the same as outside VAT, and the turnover counts all the same.
A UK farm must register for VAT if its taxable turnover for the last 12 months goes over £90,000, or if it expects to go over that in the next 30 days alone. Zero-rated sales such as livestock and food crops count towards the total. The deregistration limit is £88,000 as of October 2026. Below the threshold you can register voluntarily to reclaim input VAT, or consider the Agricultural Flat Rate Scheme. Registered farms file through Making Tax Digital for VAT.
GOV.UK says you must register if your total taxable turnover for the last 12 months goes over £90,000, or if you expect your taxable turnover to go over £90,000 in the next 30 days. HMRC's notice sets out the two tests: at the end of any month, look back over the previous 12 months, and at any time, look forward at the next 30-day period alone.
The deadlines matter. If you went over by looking back, you must register within 30 days of the end of the month in which you went over, and registration takes effect from the first day of the second month after. If you expect to go over in the next 30 days, you must apply by the end of that 30-day period, and the effective date is the day you realised, not the day turnover passed the line.
The usual trap is checking turnover once a year, at the accounts. The test is rolling, applied every month, so a big batch of finished cattle or a one-off contract can take you over mid-year. Late registration brings penalties and means paying VAT from the date you should have registered. The £90,000 figure is current as of October 2026, but check GOV.UK before relying on it.
Taxable turnover is the total value of everything you sell that is not VAT exempt or out of scope. That includes zero-rated, reduced-rate and standard-rate sales, goods you hire out, and business goods you take for personal use. So the cattle, the barley and the straw all count, even though no VAT is charged on them.
HMRC's notice says you do not include the value of capital assets, such as buildings, equipment or vehicles, which you have sold, nor exempt supplies. Selling a worn-out tractor does not push you over the line, though selling land that has been opted to tax can.
Non-farming income matters too. Taxable side lines such as bed and breakfast, farm visits, riding lessons or contracting for neighbours add to the same total. For illustration only, £80,000 of cattle plus £15,000 of contracting work is £95,000 of taxable turnover, over the limit. £80,000 of cattle plus £15,000 of exempt land rent is £80,000, under it. Our guide to farm bookkeeping and HMRC records explains how to keep these streams apart.
HMRC's animals notice says live animals are zero-rated if they are of a kind generally used in the UK, or yielding or producing food for human consumption, which covers meat and dairy animals and poultry. Horses are not on the list and are standard-rated. Most animal feed is zero-rated too, with exceptions such as packaged pet food. The same pattern shows in GOV.UK's rates page: the standard rate is 20% on most goods and services, and most food is zero-rated.
| Farm supply or cost | Usual VAT treatment |
|---|---|
| Live cattle, sheep, pigs and poultry sold for food | Zero-rated |
| Most animal feed, including most straights and compounds | Zero-rated |
| Most food for human consumption | Zero-rated |
| Horses | Standard-rated, 20% |
| Packaged pet food | Standard-rated, 20% |
| Machinery, repairs, contractors, most other purchases | Standard-rated, 20%, unless a relief applies |
| Land and property transactions | Generally exempt |
The table is a summary, so check specific products against the notices. Exempt supplies, such as letting land, are outside taxable turnover but limit what input VAT you can reclaim. Mixed taxable and exempt income is a job for your accountant.
Strictly, yes: zero-rated supplies are taxable supplies, so they count towards the threshold. But HMRC offers a way out. If your taxable supplies are wholly or mainly zero-rated, you may be exempt from registration, and you can apply. If you make some standard-rated supplies as well, you must show that your input tax would normally exceed your output tax.
Exemption is rarely what a livestock farm wants. HMRC's notice is blunt: if exemption is granted, you will not be able to reclaim the input tax you pay when you buy goods or services for the business. A farm buying machinery, repairs and fuel at 20% while selling zero-rated cattle is usually owed money under registration, so being registered is the better position.
There is also relief for a short-lived spike. If your supplies went over the threshold in the last 12 months but you can show HMRC they will not go over the deregistration limit in the next 12 months, you can apply for exception from registration. The deregistration limit is £88,000. Do not assume either request will be granted.
Below the threshold you can choose to register. HMRC says voluntary registration lets you claim back any VAT you have paid in respect of the supplies you make. For a farm with zero-rated sales and heavy standard-rated spending, that can be a regular repayment.
The cost is admin. Once registered you must submit a VAT return for every period, even if there is nothing to pay or reclaim, and the returns must go through Making Tax Digital software. Voluntary registration can be backdated by up to 4 years in some cases, but you must then account for VAT on standard-rated supplies from that date, so take advice first.
Run a year of your real numbers first, with last year's purchase invoices to hand, and take the result to your accountant.
Input tax is the VAT you are charged on business purchases and expenses. You reclaim it by deducting it from output tax on your return. HMRC's VAT guide says that zero-rated supplies are treated as taxable supplies in all other respects, including the right to recover the VAT on your own business expenditure. That is why a zero-rated livestock farm can still reclaim.
You need valid evidence, usually a VAT invoice from the supplier, and the claim goes on the return for the period of the supplier's tax point. HMRC lists what you cannot normally reclaim: VAT on goods and services not used for business, on cars, on business entertainment, and VAT relating to exempt supplies.
VAT records must be kept for at least 6 years, and registered businesses must keep and preserve certain records digitally, with digital links between programs. Copy and paste does not count as a link. Our guide to what a UK farm invoice must include covers the evidence side, and farm expenses and red diesel covers fuel and machinery costs.
The Agricultural Flat Rate Scheme is an alternative to VAT registration. According to HMRC's flat rate notice, members do not account for VAT or submit returns, so cannot reclaim input tax, but can charge a flat rate addition of 4% on sales to VAT-registered customers. To join, farming turnover must be below £150,000, and non-farming turnover must be below the registration threshold. Members must leave if farming turnover goes over £230,000.
Whether it beats registration depends on how much input VAT you would reclaim. Our flat rate scheme guide covers how it works, and the flat rate VAT calculator lets you test your own figures.
FarmHQ is a mobile-first farm office app for UK livestock farms, in pre-launch beta. It is built to code receipts with VAT as you capture them, with Ask Farmer Joe drafting and you confirming, and it does not replace your accountant. See pricing. For the wider picture on records, read the Making Tax Digital thresholds guide. Whichever route you choose, make sure the software can handle it: the seven questions to ask before you buy farm bookkeeping software start with flat rate and standard VAT.
As of October 2026 it is £90,000 of taxable turnover over the last 12 months, or an expectation of passing £90,000 in the next 30 days alone. Zero-rated sales such as livestock count towards the figure. The deregistration limit is £88,000. Check GOV.UK for the current thresholds.
Yes. Taxable turnover includes zero-rated, reduced-rate and standard-rate sales. Live animals sold for food and most food are zero-rated but still taxable supplies. Exempt supplies and the sale of capital assets, such as machinery, are not counted, though HMRC notes special rules for land with an option to tax.
Yes. Voluntary registration is open to businesses below £90,000, and lets you reclaim VAT on business purchases. You must then charge VAT where it applies, submit returns for every period and keep digital records. Many livestock farms sell zero-rated products, so they often reclaim more than they charge.
Live animals of a kind generally used in the UK, or yielding or producing food for human consumption, are zero-rated, including meat and dairy animals and poultry. Horses are standard-rated. The conditions are in HMRC's animals and animal food notice, so check it for unusual animals.
Yes. The Agricultural Flat Rate Scheme is an alternative to VAT registration. You add a 4% flat rate addition to sales to VAT-registered customers, file no VAT returns, and cannot reclaim input VAT. There are turnover limits for joining and staying in, set out in HMRC's notice.