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.
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.
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.
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, scaled by how much you owe and how late you are.
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.
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.
