Does VAT count towards VAT registration turnover?
Short version. VAT itself is excluded from taxable turnover for VAT registration. Use the value of your taxable sales before VAT.
1. Work out the amount before VAT
If a sale includes VAT at the standard 20% rate, divide its VAT-inclusive price by 1.2. For example, a £120 sale that includes £20 VAT has a £100 value before VAT. Do not divide a price by 1.2 if no VAT was charged on that sale.
2. What counts as taxable turnover
HMRC includes the value of standard-rated, reduced-rated and zero-rated taxable supplies in taxable turnover. Excluding VAT from a price does not mean the sale itself is excluded. Check the type of each supply before adding it to a VAT registration calculation.
An annual subscription value is a measure of active contracts. It is different from sales made during a period, so it should not replace a turnover calculation.