VAT GUIDE

UK VAT registration threshold 2026/27: how the tests work.

The VAT registration threshold is £90,000 of taxable turnover. That one number hides two separate tests, a strict timetable and a few traps about what counts. This guide explains each part in plain terms, so you know when you have to register and what happens next.

Figures for the 2026/27 tax year · Last reviewed 21/10/2026

The thresholds at a glance

Registration threshold: £90,000. Once your taxable turnover goes over this, you must register for VAT.
Deregistration threshold: £88,000. A registered business can usually ask to cancel its registration if taxable turnover falls below this. Our VAT schemes guide covers what happens while you stay registered.
Previous figure: £85,000. The registration threshold rose from £85,000 to £90,000 on 1 April 2024, and has stayed at £90,000 since.

The threshold is not a figure for your tax year or your company year. It is tested on a rolling basis, as the next section explains.

Test one: looking back over 12 months

You must register if your total taxable turnover for the last 12 months goes over £90,000. The 12 months roll forward every month. It is not April to April, and it is not your accounting year.

In practice, that means doing a check at the end of every month. Add up your taxable sales for that month and the 11 months before it. If the total is over £90,000, you have crossed the threshold.

Once you cross, the clock starts:

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

From the effective date, you owe HMRC VAT on your taxable sales, whether or not you have charged it to customers yet.

A worked example

This example is made up. Imagine a self-employed decorator who is not VAT registered. At the end of each month she adds up her sales for the last 12 months.

At the end of September 2026, her rolling total is £88,400. At the end of October 2026, after a busy month, it is £91,200. She went over the threshold in October.

She must register within 30 days of the end of October, so by 30 November 2026. Her effective date of registration is 1 December 2026, the first day of the second month after she went over. From 1 December, VAT is due on her taxable sales.

Test two: looking forward 30 days

The second test catches a sudden jump. You must also register if you expect your taxable turnover in the next 30 days alone to go over £90,000.

This applies even if your past turnover was small. A business that wins one large contract can be caught by it straight away.

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, not the date your turnover actually went over.

Another made-up example. A small events company agrees a single job worth £96,000 on 2 March 2027, to be invoiced and delivered within the next 30 days. On 2 March it knows that its turnover in the next 30 days will go over £90,000. Its effective date of registration is 2 March 2027, and it must register before the 30 days run out.

What counts as taxable turnover

Taxable turnover is the total value of everything you sell that is not VAT exempt or outside the scope of VAT. It is sales, not profit. Costs are not taken off.

It includes:

Standard-rated, reduced-rated and zero-rated sales. Zero-rated sales still count, even though no VAT would be charged on them.
Goods you hire out or loan to customers
Business goods used for personal reasons
Goods you barter, part-exchange or give away as gifts
Services you buy from overseas businesses that fall under the reverse charge
Goods and services under the domestic reverse charge, such as some construction services. Our construction and CIS bookkeeping page covers how that affects the books.
Building work over £100,000 that your business does for itself

Sales that are VAT exempt, or outside the scope of VAT, do not count. If you only make exempt or out-of-scope sales, you do not have to register at all.

Zero-rated sales are a common trap. A business selling mostly zero-rated goods can still have to register, even if it would rarely charge VAT. If most of its taxable sales are zero-rated, it can ask HMRC for an exemption from registration. It must ask for permission, rather than simply not registering.

If you only go over for a short time

Sometimes a business goes over the threshold because of a one-off spike, and expects to drop back below it. In that case you can apply to HMRC for a registration exception. HMRC will write to tell you whether you get one. If it refuses, it will register you.

Applying for an exception is not the same as ignoring the threshold. Until HMRC agrees, the normal rules apply.

Businesses based outside the UK

The £90,000 threshold does not help overseas businesses. If you and your business are based outside the UK and you supply goods or services to the UK, or expect to in the next 30 days, you must register whatever your turnover.

Registering below the threshold

You can register voluntarily if your taxable turnover is under £90,000. Some businesses do this because most of their customers are VAT registered and can reclaim the VAT they are charged. Being registered then lets the business reclaim VAT on its own costs.

For a business that sells mainly to the public, registering usually means either putting prices up or absorbing the VAT. Think about who your customers are before choosing to register early.

What happens once you register

You can usually register online, or an accountant or agent can do it for you. HMRC then sends you:

A 9-digit VAT registration number, which must go on every invoice you raise
Information about your VAT return and payment deadlines
Confirmation of your effective date of registration

Our guide on getting your VAT certificate explains where to find the registration details afterwards.

There is often a gap between your effective date and receiving the number. During that gap you cannot show VAT on your invoices. You can put your prices up to cover the VAT you will owe. Once the number arrives, you can reissue those invoices showing the VAT, so VAT-registered customers can reclaim it.

After that, you will need to keep digital records, follow Making Tax Digital for VAT and file VAT returns on time.

What happens if you register late

If you register late, you must pay VAT on the sales you made from the date you should have been registered. You may also have to pay a penalty, depending on how much you owe and how late you are.

The VAT on those past sales usually comes out of your own pocket. Customers have already paid the price you charged them, which did not include VAT. On a made-up £1,200 sale at the 20% standard rate, the VAT inside that price is £1,200 divided by 6, or £200. Across several months of missed registration, that adds up quickly.

How to keep track of the threshold

The rolling test is only reliable if your sales figures are reliable. That means books that are up to date, with every sale recorded and exempt or out-of-scope income kept separate.

Check monthly. Run a 12-month sales total at the end of every month, not once a year.
Watch large jobs. Before agreeing a big contract, ask whether it alone could push you over £90,000 within 30 days.
Split your income. Code exempt and out-of-scope income to separate accounts, so it can be left out of the total.
Plan your prices. If you are getting close, work out now how VAT would affect your pricing and cash flow.

Sole traders and limited companies follow the same threshold rules. If you are close to £90,000 and your books are behind, that is the time to bring them up to date. Keeping books current makes the monthly check a quick look rather than a project. Growing businesses such as cleaning companies and hair and beauty salons can pass it gradually, one contract or client at a time.