VAT registration threshold
A business must register for VAT once taxable turnover in any rolling twelve months exceeds £90,000, or when it expects to exceed it in the next thirty days alone. Deregistration is possible below £88,000.
How it works
The test is a rolling twelve months, not your financial year. At the end of every month you look back over the previous twelve and check whether taxable turnover has passed £90,000. If it has, you must register within thirty days of the end of that month, and registration takes effect from the first day of the month after that.
There is a second, faster test. If you expect taxable turnover to exceed the threshold in the next thirty days alone — a single large contract, for instance — you must register immediately and charge VAT from that date.
Late registration is expensive because HMRC treats the VAT as having been due from the correct date. You owe 20% on sales made since then whether or not you charged it, plus penalties based on how late and how careless the failure was. For a business selling to consumers, that is often absorbed out of margin.
Voluntary registration below the threshold can make sense where customers are VAT registered and you incur input VAT on costs. Where customers are consumers, it usually means a real price rise. Deregistration is allowed once turnover falls below £88,000 and is expected to stay there.
Who this affects
- Growing businesses approaching £90,000 in a rolling twelve months
- Companies winning a single large contract that triggers the thirty-day test
- Consumer-facing businesses where VAT cannot easily be added to prices
- Businesses whose turnover has fallen and who could deregister
Common mistakes
- Testing turnover against the financial year instead of a rolling twelve months
- Registering late and owing VAT on sales where none was charged
- Splitting a business artificially to stay under the threshold, which HMRC challenges as disaggregation
- Forgetting to reclaim pre-registration input VAT on goods and services
Frequently asked questions
What is the VAT registration threshold?
£90,000 of taxable turnover in any rolling twelve-month period, or expected turnover above that in the next thirty days alone.
When must I register?
Within thirty days of the end of the month in which you crossed the threshold. Registration then applies from the first day of the following month.
Can I reclaim VAT from before registration?
Usually yes: on goods still held, bought up to four years before registration, and on services received in the six months before.
Can I deregister if turnover falls?
Yes, once taxable turnover is expected to stay below £88,000 for the next twelve months.
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Reviewed by Waqas Sagar ACA FCCA FMAAT · Last reviewed 13 September 2026 · Figures for 2026/27 · About our practice
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