VAT registration threshold 2026/27: the £90,000 rules explained
When you must register for VAT, how to work out your turnover, and whether registering early makes sense.
The short answer: You must register for VAT if your VAT-taxable turnover goes over £90,000 in any rolling 12-month period, or if you expect it to go over £90,000 in the next 30 days alone. The threshold applies to sole traders and limited companies alike and was not changed in the October 2026 Budget.
Key VAT figures for 2026/27
| Figure | 2026/27 |
|---|---|
| Registration threshold | £90,000 |
| Deregistration threshold | £88,000 |
| Standard rate | 20% |
| Reduced rate | 5% |
| Zero rate | 0% |
| Flat Rate Scheme: joining limit (excluding VAT) | £150,000 |
| Cash and Annual Accounting Schemes: limit | £1.35m |
The rolling 12-month test
At the end of every month, add up your VAT-taxable turnover for the last 12 months. This is not your tax year or your company's financial year, it is always the last 12 months. If the total is over £90,000, you must tell HMRC within 30 days of the end of that month. You are then VAT-registered from the first day of the second month after you went over.
Example
Your turnover for the 12 months to 30 June 2026 reaches £91,500. You must register by 30 July 2026, and you must charge VAT on your sales from 1 August 2026.
The 30-day test
If you expect your VAT-taxable turnover in the next 30 days alone to be more than £90,000, for example because you have won a large contract, you must register by the end of those 30 days. In this case you are VAT-registered from the start of the 30-day period.
What counts towards the threshold?
- Sales that are standard-rated, reduced-rated or zero-rated all count.
- Sales that are exempt from VAT, such as most insurance, financial services and residential rent, do not count.
- Sales outside the scope of UK VAT, such as many services supplied to overseas business customers, do not count.
- It is turnover, not profit, that matters.
If you go over the threshold only because of a one-off sale and can show that your turnover in the next 12 months will be under £88,000, you can ask HMRC for an exception from registering.
Should you register voluntarily?
You can register for VAT at any turnover. It is often worth it if most of your customers are VAT-registered businesses, because they can reclaim the VAT you charge, while you can reclaim VAT on your own costs. It is usually not worth it if you sell mainly to consumers, because your prices go up by 20% or your margin goes down.
When you register, you can usually reclaim VAT on goods you bought in the last four years and still have, and on services bought in the last six months, as long as they are for the business.
VAT schemes for small businesses
- Flat Rate Scheme. You pay HMRC a fixed percentage of your VAT-inclusive turnover and cannot reclaim most input VAT. You get a 1% discount in your first year. If you spend very little on goods, less than 2% of turnover or £1,000 a year, you must use the 16.5% limited cost trader rate, which makes the scheme poor value for most service businesses.
- Cash Accounting Scheme. You pay VAT when your customers pay you, not when you invoice, which helps cash flow.
- Annual Accounting Scheme. You file one VAT return a year and pay in instalments.
All VAT-registered businesses must keep digital records and file VAT returns through Making Tax Digital compatible software.
What if you register late?
HMRC will ask you to pay the VAT you should have charged from the date you should have been registered, even if you did not charge it to your customers. Penalties and interest can also apply. If you are getting close to £90,000, check your rolling turnover every month.
Getting close to the VAT threshold?
We monitor your rolling turnover, register you with HMRC at the right time, choose the best VAT scheme for your business and file your VAT returns.
Book a free strategy callFrequently asked questions
What is the VAT threshold for 2026/27?
£90,000 of VAT-taxable turnover in any rolling 12-month period. The deregistration threshold is £88,000.
Is the VAT threshold based on turnover or profit?
Turnover. It is the total value of your VAT-taxable sales, before any costs are deducted.
Does the VAT threshold apply to sole traders?
Yes. The same £90,000 threshold applies to sole traders, partnerships and limited companies. It applies to the person or company, so a sole trader with two businesses adds them together.
How long do I have to register for VAT?
30 days from the end of the month in which your rolling 12-month turnover went over £90,000. You are then registered from the first day of the second month after that.
Can I deregister for VAT?
Yes, if you expect your VAT-taxable turnover for the next 12 months to be below £88,000, or if you stop making taxable sales.
Related guides
- Sole trader vs limited company 2026/27: which pays less tax?
- Corporation Tax rates 2026/27: 19%, 25% and marginal relief
- Buying a car through your limited company in 2026/27
This guide is general information for the 2026/27 tax year and is not personal tax advice. Special VAT rules apply to some sectors, to sales of goods to and from Northern Ireland and to businesses based outside the UK. Speak to an accountant about your business.
