You need to register for VAT once your VAT-taxable turnover goes over £90,000 in any rolling 12-month period, or if you expect to exceed £90,000 in the next 30 days alone. This threshold applies for the 2026/27 tax year. You can also register voluntarily below £90,000 if it suits your business.
Most UK businesses cross the VAT line on the backward look, the rolling 12-month test, earlier than they expect. Here is how each test works, when the clock starts, and the deadlines you cannot afford to miss.
What Counts Towards the £90,000 VAT Threshold?
The threshold is based on VAT-taxable turnover, not profit and not your total sales. Taxable turnover means the total value of everything you sell that is not VAT-exempt or outside the scope of VAT.
It includes:
- Standard-rated, reduced-rated and zero-rated sales
- Goods you hire or loan to customers
- Business goods you use for personal reasons
- Most goods and services you barter or part-exchange
It excludes VAT-exempt supplies (such as most insurance, finance, and some education and health services) and anything outside the scope of UK VAT.
The Two VAT Registration Tests: Backward Look vs Forward Look
There are two separate triggers, and you only need to breach one of them.
| Test | What it measures | When you must register |
|---|---|---|
| Backward look (rolling 12 months) | Total taxable turnover for the previous 12 months on a rolling basis | Within 30 days of the end of the month you went over £90,000 |
| Forward look (next 30 days) | Turnover you expect in the next 30 days alone | By the end of that 30-day period |
Backward Look: The Rolling 12 Months
This is not your accounting year or the tax year. At the end of every month, add up your taxable turnover for the previous 12 months. The moment that running total goes over £90,000, you must register.
Example: If your rolling 12-month turnover first passes £90,000 on 18 September, you must register by 31 October, within 30 days of the end of the month you went over. Your effective date of registration is 1 November, the first day of the second month after you crossed the threshold.
Forward Look: The Next 30 Days
If you realise on a single day that your taxable turnover will exceed £90,000 in the next 30 days on its own, say you win one large contract, you must register straight away. Here your effective registration date is the day you realised, not a later month.
This test catches new businesses with a big launch order and stops them trading VAT-free on a sum that already breaches the threshold. A seasonal spike can do the same, online retailers often see their busiest weeks in December, so our Christmas tax checklist for UK ecommerce sellers is worth a read before the peak.
Worked Example: How the Rolling 12-Month Check Works Month by Month
The backward look trips up more businesses than any other part of VAT registration, because the 12-month window moves forward every single month. Here is a worked example for a tradesperson whose turnover is climbing through 2026, a scenario we cover in more depth in our guide to whether tradesmen need to register for VAT and the £90k trap. At the end of each month you drop the oldest month and add the newest, then compare the running total to £90,000.
| Month end | That month's taxable turnover | Rolling 12-month total | Over £90,000? |
|---|---|---|---|
| June 2026 | £7,000 | £82,000 | No |
| July 2026 | £7,500 | £85,500 | No |
| August 2026 | £8,000 | £88,500 | No |
| September 2026 | £9,000 | £93,500 | Yes |
The running total first passes £90,000 at the end of September 2026. Under HMRC's rule you must register within 30 days of the end of that month, so by 31 October 2026. Your effective date of registration is 1 November 2026, the first day of the second month after you went over, and from that date you must charge VAT on your standard-rated sales. Miss the 31 October deadline and you still owe HMRC the VAT from 1 November onward, plus a possible failure-to-notify penalty. These timings are set out in the GOV.UK guidance on when to register for VAT.
How Does the UK VAT Threshold Compare Internationally?
One detail rarely mentioned in the commodity guides: at £90,000 the UK has one of the highest VAT registration thresholds in the developed world. Across the OECD only Switzerland sits at a comparable level, while most EU member states require registration at far lower turnover (and intra-EU distance sellers face a common threshold of just EUR 10,000). In practice that means a UK micro-business can trade VAT-free for far longer than its European counterparts, which is exactly why so many growing firms cross the line on the rolling 12-month test before they have planned for it. If you sell across borders, the low EU thresholds mean you can owe VAT abroad while still being below £90,000 at home, see do I charge VAT to overseas customers for how that interacts.
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What Is the VAT Deregistration Threshold?
You can ask to cancel your registration if your taxable turnover falls below the deregistration threshold of £88,000 in the next 12 months. Deregistration is optional, not automatic.
Should I Register for VAT Voluntarily Below £90,000?
Plenty of businesses register before they have to. Voluntary registration can make sense if:
- You sell mainly to VAT-registered businesses, they reclaim the VAT you charge, so your prices stay competitive while you reclaim VAT on your own costs.
- You buy a lot of standard-rated stock or equipment, registering lets you reclaim input VAT, improving cash flow.
- You want the credibility of a VAT number with larger clients.
It rarely helps if you sell to the public or to VAT-exempt customers, because adding 20% VAT effectively raises your prices. Weigh it up carefully, our VAT services team models both scenarios before you commit. It is also worth choosing the right scheme at the same time, our guide to UK VAT schemes explains whether the Flat Rate, Cash Accounting or Standard scheme fits you best.
How Do I Register for VAT?
- Register online through your Government Gateway account, or have your accountant do it as your agent.
- HMRC issues your VAT number, usually within around 30 days.
- From your effective date of registration, you must charge VAT on standard and reduced-rated sales, keep digital VAT records, and file returns under Making Tax Digital.
You can find the official rules in the GOV.UK guide to registering for VAT.
For the step-by-step process see our walkthrough on how to register for VAT, and once you are registered, how to complete a UK VAT return covers your first filing.
What Happens If I Register for VAT Late?
Late registration is costly. You must still pay HMRC the VAT you should have charged from your effective date, even if you never collected it from customers, which means it comes straight out of your margin. HMRC may also charge a failure-to-notify penalty, calculated as a percentage of the VAT you should have paid (the potential lost revenue). For a non-deliberate failure it ranges from 0% to 30% depending on whether you come forward voluntarily and how late you are, per HMRC's failure-to-notify rules (CC/FS11).
The fix is straightforward: run the rolling 12-month check at the end of every month. If you are within striking distance of £90,000, talk to an accountant early, see our FAQ for more on timing and record-keeping.
Frequently Asked Questions
Is the VAT registration threshold still £90,000 in 2026?
Yes. For the 2026/27 tax year the compulsory VAT registration threshold remains £90,000 of taxable turnover, and the deregistration threshold is £88,000.
Does the VAT threshold apply to my profit or my turnover?
It applies to your VAT-taxable turnover, not profit. You add up the value of taxable sales (standard, reduced and zero-rated) over a rolling 12 months, costs and expenses are irrelevant to the test.
Do I need to register for VAT if I'm self-employed or a sole trader?
The rules are identical regardless of structure. A sole trader, partnership or limited company must all register once taxable turnover crosses £90,000. The threshold applies per legal entity, not per person.
How long do I have to register after going over the threshold?
Under the backward look, you must register within 30 days of the end of the month you exceeded £90,000, with registration effective from the first day of the second month after you went over. Under the forward look, you must register by the end of the 30-day period in which you expect to breach it.
What is the VAT threshold for 2026?
The VAT threshold for 2026 is £90,000 of VAT-taxable turnover over any rolling 12-month period, with deregistration available below £88,000. Unlike the income tax threshold, which steps up through the personal allowance and the basic, higher and additional rates, the 2026 VAT threshold is a single turnover figure: cross it and you must register, whatever your profit.
Talk to Us Before You Cross the Line
Getting VAT registration timing right protects your cash flow and keeps you clear of penalties. If your turnover is climbing towards £90,000, or you're weighing up voluntary registration, get in touch with Zmartly and we'll handle the registration, the Making Tax Digital setup, and your first return.
