VAT Registration Threshold UK 2026/27: When Do You Have to Register?
VAT is one of the most misunderstood taxes in the UK, and the registration threshold sits at the heart of the confusion. Do you have to register? When? And what happens if your turnover dips below the threshold again?
This guide covers the 2026/27 rules: the £90,000 threshold, compulsory versus voluntary registration, and the practical steps involved.
The current VAT registration threshold
For 2026/27 the VAT registration threshold remains £90,000 of taxable turnover in a rolling 12-month period. The deregistration threshold is £88,000 — you can deregister once your taxable turnover drops below this level.
"Taxable turnover" means the value of everything you sell that would be subject to VAT if you were registered. It's not profit — it's your total sales. For most businesses, that's simply your gross revenue.
When must you register?
You must register for VAT if either of these applies:
- Historic test: your taxable turnover over the past 12 months exceeded £90,000.
- Future test: you expect your taxable turnover to exceed £90,000 in the next 30 days alone.
The future test catches businesses with large one-off sales — for example, selling a valuable piece of equipment or land. If you have a single contract that pushes you over, you need to register from the day that contract is signed or the supply is made.
How to register
Registration is done online through your HMRC Government Gateway account. You'll need:
- Your business details and bank account information
- A valid UK address
- Your turnover figures for the past 12 months
- An email address and phone number for HMRC contact
HMRC usually issues your VAT number within a few weeks. You can also ask your accountant to handle registration for you — which is faster and avoids costly mistakes in the forms.
What happens after you register?
Once registered you must:
- Charge 20% VAT on most goods and services (the standard rate; some items are 5% or 0%)
- File quarterly VAT returns digitally through MTD-compliant software — paper returns are no longer accepted
- Keep digital records of all sales and purchases
- Pay HMRC the VAT you've collected, minus the VAT you've reclaimed on business purchases
This is where most small businesses feel the pinch: they must charge VAT, but they can only reclaim VAT on purchases in their business name. The paperwork burden is real, but a good accountant removes it.
Voluntary registration — should you?
You don't have to wait until £90,000. Many businesses register voluntarily for three reasons:
- Reclaiming VAT on purchases, if you buy a lot of VAT-able goods and services (e.g. equipment, stock, professional fees).
- Credibility — some clients, especially larger companies, prefer or require VAT-registered suppliers.
- Simpler compliance later, if growth is likely.
The downside: you must charge VAT on your sales, which makes your prices 20% higher for non-VAT-registered customers. That's often a deal-breaker for consumer-facing businesses.
When can you deregister?
If your taxable turnover falls below £88,000 in the past 12 months — and you don't expect it to rise again — you can deregister. There are special rules if you sell assets on which you claimed VAT, so get advice before deregistering if you hold stock or equipment.
New to VAT? Keep an eye on the threshold
The government has consulted on lowering the £90,000 threshold, so it may change in future years. If your turnover is creeping toward it, get advice early — there are legitimate planning options, and there are mistakes that trigger interest and penalties.
We handle VAT for you
From registration to quarterly MTD filing to deregistration, NTM Associates Ltd manages the whole VAT lifecycle for small businesses. Get in touch for a fixed-fee quote.
Rates and thresholds as of August 2026, based on the Autumn Budget 2025. VAT rules can change — always confirm current figures with HMRC or your accountant.
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