VAT Registration Threshold 2026

When Do You Need to Register for VAT?

The VAT registration threshold is £90,000 of VAT-taxable turnover, measured on a rolling 12-month basis — not a calendar year or tax year. This applies to all UK businesses regardless of structure: limited companies, LLPs, PLCs, and sole traders alike.

Non-established taxable persons (NETPs): if you're not based in the UK but sell goods or services here — including service providers and e-commerce sellers shipping into the UK — there is no threshold at all. You must register from your very first UK sale, or face penalties for late registration.

If your taxable turnover later falls below £88,000, you can apply to deregister — though it's optional, not automatic.

Two Ways You Can Be Caught Out

• Rolling test: if you exceed £90,000 at any point across the last 12 months, you must apply for VAT registration within 30 days of the end of the month you crossed the threshold.
• Future test: if you expect your turnover to exceed £90,000 in the next 30 days alone, you must register before the end of that 30-day period — not wait to see if it actually happens.

Register late under either test, and HMRC can charge interest and penalties on top of the VAT you should have collected but didn't.

Worked Examples

Example 1: The Rolling Test

A UK-based B2C company turns over £9,700 every month. After 9 months that's £87,300 — still under the threshold. In month 10, cumulative turnover crosses £90,000. From the end of that month, there are 30 days to apply for registration.

Example 2: The Future Test

A contractor wins a £100,000 job lasting 3 weeks. Since turnover is expected to exceed £90,000 within the next 30 days, registration is required immediately — not at the end of the job, and not at month-end.

Example 3: NETP, No Threshold

An e-commerce seller based in Canada ships an £11 item to a UK customer. Because they're a non-established taxable person selling into the UK, they must register for VAT right away — the £90,000 threshold never applies to them, regardless of how small that first sale is.

Voluntary Registration

You don't have to wait until you exceed £90,000. For B2B businesses, registering as early as possible usually makes sense — you can reclaim VAT on expenses immediately, and being VAT-registered often signals a more established, credible business to other companies you invoice.

For B2C sales, where the VAT chain stops with the end consumer who can't reclaim it, the calculation is different. Many B2C businesses deliberately delay registration for as long as possible — or structure the business to permanently stay below the threshold — since registering adds an effective 20% cost pressure on price or margin that a non-VAT-registered competitor doesn't have.

What Happens Before Your VAT Number Arrives?

Your VAT number can take several weeks to arrive after you apply. In the meantime, you must still account for VAT from your effective registration date — the date shown on HMRC's confirmation letter, not the date the number itself lands.

In practice, this means either building VAT into your prices from that date and issuing invoices that reference ‘VAT registration applied for’ until the number arrives (then reissuing with the full VAT number), or holding invoices until the number comes through. Either way, the VAT liability starts from your effective date regardless of which approach you take — you can't backdate your way out of it.

How to Register for VAT

1. Assess your position — do you need to register, or would voluntary registration benefit your business?
2. Decide which scheme suits you: standard VAT accounting, Flat Rate, Cash Accounting, or Annual Accounting (see scheme thresholds below).
3. Gather your information — entity details, business address, sector (SIC code), and expected turnover.
4. Apply online at gov.uk/register-for-vat, or have your accountant register on your behalf.
5. Once HMRC's confirmation letter arrives with your effective date, start charging VAT from that date — not from when the VAT number itself arrives.
6. Update every system that touches pricing or invoicing — accounting software, e-commerce platforms, point-of-sale systems, and any automated invoice templates.
7. Set up Making Tax Digital (MTD) compatible software. VAT-registered businesses are legally required to keep digital records and file returns through MTD-compatible software — popular options include Xero, QuickBooks, FreeAgent and Sage, typically costing around £12–£40 per month.

What If You Register Late?

HMRC will calculate the VAT you should have charged from the date you were required to register, and you'll owe that amount — plus interest — even if you never actually collected it from customers at the time.

Penalties are behaviour-based rather than fixed, and can be significantly reduced if the failure was careless (rather than deliberate) and you disclose it to HMRC before they discover it themselves.

Interest accrues on the outstanding VAT from the date it should have been paid until it's settled.

The practical lesson: if you realise you've crossed the threshold late, telling HMRC proactively almost always results in a materially lower penalty than waiting to be caught.

Registering Multiple Businesses Together

If you run more than one business under common control, you may be able to register them as a single VAT group, filing one VAT return covering all the entities rather than separate returns for each. This can simplify admin, though transactions between group members are generally disregarded for VAT purposes, and all group members become jointly liable for the group's VAT debts — a trade-off worth discussing with an accountant before opting in, rather than something to default into automatically.

Main VAT Scheme Thresholds at a Glance

How the Threshold Has Changed

The £90,000 threshold took effect on 1 April 2024, up from £85,000 — the first increase since 2017, after the threshold had been frozen for seven years while inflation eroded its real value. If you're comparing against older articles or spreadsheets, anything referencing £85,000 predates this change.

Frequently Asked Questions