When Do You Need to Register for VAT in the UK? (2026 Guide)

The VAT registration threshold in 2026

The current UK VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. This threshold has been in place since 1 April 2024, when it rose from £85,000.

The threshold is rolling, not calendar-year. HMRC looks at any 12-month period ending in the current month — not just the tax year. This catches many sole traders off guard: a strong spring can push 12-month turnover above £90,000 even if the calendar year totals less.

How the 30-day rule works

Once your taxable turnover exceeds £90,000 in any rolling 12-month period, you have 30 days to notify HMRC and register for VAT. Registration must be backdated to the day after the end of the month in which you crossed the threshold.

If your turnover is expected to exceed £90,000 in the next 30 days alone — even if it hasn't already — you must register immediately. This forward-looking rule catches seasonal businesses and project-based sole traders.

What happens if you miss the deadline

HMRC will register you and issue a backdated VAT number. You will owe VAT on all sales from the date you should have registered — even if you did not charge it to your clients. You will also face a late registration penalty.

Getting clients to pay VAT retrospectively on invoices that were not originally VAT-inclusive is uncomfortable at best and sometimes impossible. This is why monitoring your rolling 12-month turnover monthly is essential once you are approaching the threshold.

Voluntary registration below the threshold

You can register for VAT voluntarily even if your turnover is below £90,000. This makes sense if:

• Your customers are primarily VAT-registered businesses (they can reclaim the VAT, so you charging it does not affect them)
• You have significant VAT costs on your purchases that you want to reclaim
• You want to appear larger and more established to potential clients

Voluntary registration does not make sense if your customers are predominantly consumers or non-VAT-registered businesses, as charging VAT directly increases their cost with no reclaim available.

Setting up for MTD compliance

From 1 April 2022, all VAT-registered businesses must use MTD-compatible software to keep records and file VAT returns. If you register for VAT in 2026, you are automatically within MTD for VAT from day one.

This means you need cloud accounting software — Xero, QuickBooks, or FreeAgent — set up and connected to HMRC's Making Tax Digital gateway before your first return is due.

What counts as taxable turnover?

Taxable turnover includes all VAT-taxable sales — standard-rated (20%), reduced-rate (5%), and zero-rated (0%) supplies. It does not include exempt supplies (certain financial services, insurance, education) or out-of-scope income.

If you sell a mix of taxable and exempt supplies, only the taxable element counts toward the threshold. This is a partial exemption calculation and worth reviewing with a bookkeeper if your income is mixed.

Deregistration

You can deregister from VAT if your taxable turnover falls below £88,000 and you expect it to remain below that level. Deregistration is voluntary — HMRC will not automatically remove you.

There is often a good reason to stay registered even below the threshold: you lose the right to reclaim input VAT on purchases, which can be significant if you have substantial business costs.