What is the threshold for 2026/27?
The threshold is £90,000 for 2026/27, the same as 2025/26. The deregistration threshold is £88,000. Neither changed at the Autumn Budget 2025 or the Spring Statement 2026, and no end date for the freeze has been confirmed. The rumoured rise to £100,000 did not happen.
The threshold does not follow the tax year. It covers any 12 months in a row, so you check it at the end of every month.
From 1 April 2017 the registration threshold was £85,000 and the deregistration threshold was £83,000. From 1 April 2024 they are £90,000 and £88,000.
How do the two registration tests work?
Two tests decide when you must register, and either one can catch you. The backward test looks at your last 12 months of taxable turnover at each month end. The forward test looks at the next 30 days alone. Passing one does not get you out of the other.
| Test | What you check | Tell HMRC by | Registered from |
|---|---|---|---|
| Rolling 12 months | Taxable turnover for the last 12 months, at each month end | 30 days after the end of the month you went over | The first day of the second month after you went over |
| Forward 30 days | Expected taxable turnover in the next 30 days alone | The end of that 30 day period | The start of that 30 day period |
The rolling 12 month test (looking back)
At the end of each month, add up your taxable turnover for that month and the 11 before it. If the total is over £90,000, you must tell HMRC within 30 days of the end of that month. You are VAT registered from the first day of the second month after the month you went over.
Example: say you sell £7,000 a month, then a big job brings in £15,000 in May 2026. Your 12 months to 31 May 2026 come to £92,000 (11 × £7,000 + £15,000). That is over £90,000 for the first time. You must register by 30 June 2026, and you are registered from 1 July 2026.
The forward 30 day test (looking ahead)
This test catches businesses that land one very large contract. If you expect taxable turnover in the next 30 days alone to be over £90,000, you must register by the end of those 30 days. You are registered from the start of that period, the day you realised.
Example: on 10 March 2026 you agree a contract that will bring in £95,000 within 30 days. You must register by 8 April 2026, and you are registered from 10 March 2026.
What counts as taxable turnover?
Taxable turnover is the total of your sales that are not exempt from VAT and not outside its scope. It includes standard, reduced and zero rated sales. It is turnover, not profit, so a business making a loss still has to register once it goes over.
| Include | Leave out |
|---|---|
| Standard rated sales (20%) | Exempt sales (most insurance, finance, some health and education) |
| Reduced rated sales (5%) | Sales outside the scope of UK VAT |
| Zero rated sales (most food, children's clothes, books) | Sales of capital assets you used in the business |
| Goods you hire or loan out, and business goods used for personal reasons | Money in that is not a sale, such as a loan or your own capital |
Zero rated sales catch people out. A greengrocer selling only zero rated food still counts every sale towards the threshold, even though none of it carries VAT.
The threshold is per person or legal entity, not per business. A sole trader running two businesses adds both together. A limited company is a separate person from its director.
A temporary spike
You may be able to ask HMRC for an exception from registration. This applies if you go over the threshold but can show your taxable turnover for the next 12 months will be under £88,000. Write to HMRC with evidence, such as a one-off contract that will not repeat.
Businesses based outside the UK
There is no threshold for businesses with no UK establishment. If they make any taxable supplies in the UK, they must register from the first one.
Should you register voluntarily?
You can register at any turnover, even nil, as long as you make or intend to make taxable sales. It usually pays if your customers are VAT registered or your costs carry a lot of VAT. It usually costs you if you sell mainly to the public.
Reasons it can pay:
- Your customers are mostly VAT registered businesses. They reclaim the VAT you charge, so your price to them does not really go up.
- You buy a lot of standard rated goods or equipment and want the VAT back.
- You make mainly zero rated sales, so you charge little or no VAT but can reclaim VAT on costs.
- You can reclaim VAT on goods you still hold that you bought up to 4 years before registering. For services, you can go back 6 months.
Reasons it often does not:
- You sell mainly to the public. Your prices go up by 20%, or your margin falls by the same if you hold prices.
- You take on returns, records and deadlines under Making Tax Digital, and the penalties that come with missing them.
- A small business with few costs reclaims little input tax (the VAT you pay on your costs).
The Flat Rate Scheme can soften this for small businesses with low costs. Check the numbers with the Flat Rate Scheme calculator.
What happens if you register late?
HMRC backdates your registration to the date it should have started. You owe VAT on every taxable sale from that date, whether or not you charged it. You may also face a failure to notify penalty and interest. Telling HMRC before they find you gets the lowest penalty.
On sales you made without VAT, HMRC treats your price as if it had included VAT all along. You pay that VAT out of money you have already been paid.
Example: say you made £12,000 of standard rated sales after your registration date without charging VAT. At 20%, the VAT inside a VAT-inclusive price is one sixth. So you owe £12,000 ÷ 6 = £2,000.
The failure to notify penalty is a percentage of the VAT you owe. The rate depends on how late you were and whether it was careless or deliberate. It also depends on whether you told HMRC before they found you.
If you realise you are late, register now. Waiting only makes the bill bigger.
How do you register?
Most businesses register online through an HMRC business tax account, or ask an accountant or agent to do it. You need your business details, turnover figures, bank details and the date you went over the threshold. HMRC then signs you up for Making Tax Digital automatically.
You need compatible software to file returns. Read Making Tax Digital for VAT before your first return.
Between your registration date and getting your VAT number, you cannot show VAT on invoices. You can raise invoices without VAT and reissue them once the number arrives. Or put your prices up by 20% to cover it.
When can you deregister?
You can ask HMRC to cancel your registration if you expect taxable turnover for the next 12 months to be under £88,000. You must cancel within 30 days if you stop trading or stop making taxable sales. You then file a final return.
When you deregister, you may have to pay VAT on stock and assets you still hold if you reclaimed VAT on them. You do not pay it if the VAT due is £1,000 or less.
What to do next
- Check your rolling total at every month end. The VAT threshold calculator adds it up and gives your registration dates.
- If you are over, register straight away. HMRC lists what you need on register for VAT on gov.uk.
- If you sell mostly to the public and have few costs, compare normal accounting with the Flat Rate Scheme.
This guide is general information. Check gov.uk or ask an accountant about your own case.
Questions
What is the VAT threshold for 2026?
The threshold is £90,000 of taxable turnover over any rolling 12 months. It has been at this level since 1 April 2024 and no end date for the freeze has been confirmed.
Do I need to register for VAT if I make a loss?
Yes, if your taxable turnover is over £90,000. The test is turnover, not profit.
Is the threshold based on the tax year?
No. It is any 12 months in a row. Check it at the end of every month, not just in April.
Do zero rated sales count towards the threshold?
Yes. Zero rated sales are taxable at 0%, so they count. Exempt sales do not.
What is the VAT deregistration threshold?
The deregistration threshold is £88,000. If you expect your taxable turnover for the next 12 months to be below that, you can ask HMRC to cancel your registration.
Figures in this guide come from our rules file, last checked against HMRC on 4 October 2026.
