VAT in the 2026/27 tax year: what changed on 1 April and what did not

UK VAT starts the 2026/27 tax year at 20%, 5% and 0%, with the same £90,000 registration threshold it has had since 1 April 2024. Neither the Autumn Budget on 26 November 2025 nor the Spring Statement on 3 March 2026 changed them. The real changes are narrow, and most businesses need to do nothing.

For a running list of every rule change we track, see VAT changes.

Who this affects

• Every VAT-registered business: rates, thresholds and penalties are the same, so nothing on your invoices should change.
• Businesses near £90,000: the rolling 12 month test still applies.
• Businesses that give stock to charity: a new relief started on 1 April 2026.
• Tour operators that bundle taxi transfers: taxis left the margin scheme on 2 January 2026.
• Sole traders and landlords: MTD for Income Tax started on 6 April 2026.

What has not changed

The registration test still works on a rolling 12 months. If your taxable turnover for the last 12 months goes over £90,000, you must register. Check where you stand with the VAT threshold calculator or our registration threshold guide. The figures are on gov.uk's VAT rates and VAT thresholds pages.

Pay within 15 days of the deadline and there is no penalty, only interest. After that, you pay 3% of what was unpaid at day 15 and another 3% of what was unpaid at day 30. A daily second penalty at 10% a year starts from day 31. HMRC explains this in how late payment penalties work.

HMRC interest follows Bank Rate, which has been 3.75% since 18 December 2025. So late payment interest has been 7.75% and repayment interest 2.75% since 9 January 2026 (HMRC interest rates).

What it means for you

Say you owe £5,000 of VAT and pay it late. Interest is £5,000 × 7.75% × days late ÷ 365. The 3% penalty applies only if the VAT is still unpaid at day 15.

Ten more days, past day 15, took the cost from £10.62 to £171.23. Work out your own figures with the VAT penalty calculator and the HMRC interest calculator.

What changed

Donations of goods to charity

A new VAT relief for businesses that donate goods to charity started on 1 April 2026. It only applies where its conditions are met, so read them on gov.uk before you rely on it.

Taxis and private hire

Taxi and private hire journeys left the Tour Operators' Margin Scheme on 2 January 2026. If you bundle transfers into packages, check how you now treat that part of the price.

MTD for Income Tax

Making Tax Digital for Income Tax started on 6 April 2026. It is separate from MTD for VAT, which every VAT-registered business has used since April 2022. Sole traders and landlords may now have both. Our MTD for VAT guide covers the VAT side.

What to do now

• Check your prices and invoices still show 20%, 5% or 0% correctly.
• If you are near £90,000, run the rolling 12 month test every month.
• If you donate goods to charity, read the relief conditions on gov.uk.
• If you are a sole trader or landlord, find out whether MTD for Income Tax applies to you.
• If you reclaim VAT on private fuel for a company car, watch for HMRC's new fuel scale charges. HMRC publishes them each spring, for VAT periods starting on or after 1 May. Then use the fuel scale charge calculator.

Mandatory e-invoicing for UK business invoices has been announced for April 2029. It is not law yet, so for now just note what your accounting software supplier says.