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.
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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.