VAT Registration Threshold 2026: Do You Need to Register?

The VAT registration threshold is the turnover figure that decides when a UK business must register for VAT with HMRC. For 2026 it stands at £90,000 of VAT taxable turnover. Go over it and you have a fixed window to register, after which you must charge VAT on your sales and file VAT returns. Miss it and HMRC can backdate your registration and ask for VAT you never collected from your customers.

This guide explains how the VAT registration threshold works in practice: what counts towards it, the two tests HMRC uses, your deadline and effective date, what happens if you register late, and why some businesses choose to register before they have to.

What is the VAT registration threshold in 2026?

The current VAT registration threshold is £90,000. It rose from £85,000 on 1 April 2024 and has not changed since. The figure applies across the UK, to sole traders, partnerships and limited companies alike. There is also a lower deregistration threshold of £88,000: if your taxable turnover is expected to fall below that in the next 12 months, you can ask HMRC to cancel your registration.

The threshold is measured against VAT taxable turnover, not profit. That is the total value of everything you sell that is not exempt from VAT. It includes:

• sales at the standard rate (20%), the reduced rate (5%) and the zero rate (0%)
• goods you hire or loan to customers
• business goods used for personal reasons
• goods you bartered, part-exchanged or gave as gifts

Zero-rated sales are the ones that catch people out. A business selling only zero-rated goods, such as most food or children's clothing, still counts those sales towards the VAT registration threshold, even though no VAT would be charged on them. Exempt sales, such as most insurance, finance and education, do not count.

The rolling 12-month test

The first way to cross the VAT registration threshold is the backward-looking test. At the end of every month, add up your taxable turnover for the previous 12 months. If that total is more than £90,000, you must register.

This is a rolling test, not a tax-year or calendar-year one. Many business owners check their turnover once a year when their accounts are prepared, and by then they may have crossed the VAT registration threshold months earlier. The safest habit is to check the last 12 months' sales at every month end.

Your deadline under the 12-month test

You must register within 30 days of the end of the month in which you went over the threshold. Your effective date of registration, the date you must start charging VAT from, is the first day of the second month after you went over.

For example, if your rolling 12-month turnover first goes over £90,000 at the end of March, you must register by 30 April and your effective date of registration is 1 May.

The 30-day forward-looking test

The second test looks ahead. If you expect your taxable turnover to go over £90,000 in the next 30 days alone, you must register, even if your turnover so far is far below the VAT registration threshold.

This usually applies when a business wins a single large contract, opens a new site, or takes a big order that will be invoiced within the month. A builder agreeing a £120,000 project to be invoiced next month would be caught by this test straight away.

Your deadline under the 30-day test

You must register by the end of that 30-day period. Your effective date of registration is the date you realised you would go over the threshold, not the date your turnover actually went over it. That means you may need to charge VAT on sales sooner than you might expect.

What happens if you register late?

If you go over the VAT registration threshold and do not register on time, HMRC will register you from the date you should have been registered. You then owe VAT on every taxable sale made since that date, whether or not you charged it to your customers.

For a business that has been selling for a year at £100,000 turnover without VAT, that can mean a five-figure bill that has to come out of profit, because most customers cannot be asked to pay extra VAT after the event. HMRC can also charge a penalty for failing to notify, based on a percentage of the VAT owed and how careless or deliberate the failure was, as well as interest on the late VAT.

If you realise you have missed the deadline, register straight away and tell HMRC. Coming forward before HMRC finds you usually means a lower penalty.

Can you stay under the VAT registration threshold?

Some businesses with turnover close to £90,000 try to keep below the VAT registration threshold, for example by turning work away near the end of the year. That is legal, as long as the business is genuinely turning work down.

What is not allowed is artificially splitting one business into several smaller ones, each under the threshold, purely to avoid VAT. HMRC can treat linked businesses as a single business and register them together. If two businesses share the same owners, premises, staff and customers, expect HMRC to look closely.

There is also a temporary exception. If you go over the threshold because of a one-off spike, and you can show your turnover will fall back below the deregistration threshold of £88,000 in the next 12 months, you can write to HMRC and ask for an exception from registering.

Voluntary registration below the threshold

You can register for VAT at any time, even if your turnover is well below the VAT registration threshold. Registering voluntarily can make sense when:

• Your customers are VAT-registered businesses. They can reclaim the VAT you charge, so adding 20% does not make you more expensive for them.
• You buy a lot of standard-rated goods or services. Once registered, you can reclaim the VAT on your business purchases.
• You sell mainly zero-rated goods. You charge no VAT on sales but can still reclaim VAT on costs, which often means regular refunds from HMRC.
• You want to look established. Some larger clients prefer to work with VAT-registered suppliers.

It is usually a poor fit if most of your customers are members of the public, because you would either have to raise your prices by 20% or absorb the VAT out of your margin. Our guide on when to register for VAT and why goes through the pros and cons in more detail.

Reclaiming VAT on costs from before you registered

Once registered, you can usually reclaim VAT on some costs from before your effective date of registration, as long as they were for the business you now run:

• goods you still have, or that were used to make goods you still have, bought up to 4 years before registration
• services bought up to 6 months before registration

Keep the VAT invoices for these purchases. You claim the VAT on your first VAT return.

What changes once you are registered

After you cross the VAT registration threshold and register, a few things change straight away:

1. You charge VAT on your sales from your effective date of registration, and show your VAT number on your invoices.
2. You keep digital records and file VAT returns using software that works with Making Tax Digital, usually every quarter.
3. You pay HMRC the VAT you charged, minus the VAT you can reclaim on business costs, by your return's deadline.

While you wait for your VAT number, you cannot show VAT on your invoices. You can raise your prices to cover the VAT you will owe and reissue VAT invoices to customers once your number arrives. Our guide to VAT return deadlines and penalties explains what comes next.

Choosing a VAT scheme

When you register you can also join a scheme that may simplify your VAT:

• Flat Rate Scheme: you pay a fixed percentage of your gross turnover to HMRC, set by your trade, instead of working out VAT on each sale and purchase. Open to businesses with taxable turnover up to £150,000 (excluding VAT).
• Cash accounting: you pay VAT when your customers pay you, not when you invoice them, which helps cash flow. Open to businesses with taxable turnover up to £1.35 million.
• Annual accounting: one VAT return a year, with advance payments through the year.

The right scheme depends on your margins, your costs and how quickly your customers pay. It is worth working out the numbers before you choose.

VAT registration threshold: a quick checklist

• Total your taxable sales for the last 12 months at the end of every month.
• Include zero-rated sales; leave out exempt sales.
• If the total is over £90,000, register within 30 days of that month end.
• If a single month ahead will take you over £90,000, register before that 30-day period ends.
• Keep invoices for recent purchases so you can reclaim pre-registration VAT.
• Choose a VAT scheme and set up Making Tax Digital software before your first return.

You can read HMRC's own rules on when to register for VAT on GOV.UK.

How Tyson Roselyn can help

If you are close to the VAT registration threshold, or you have already gone over it, we can register your business with HMRC for you, check your effective date, and help you pick the right scheme from day one. See our VAT registration service for what is included and how quickly we can get you registered.