VAT Threshold UK 2026: £90,000 Registration Limit Explained

Chandraketu Tripathi

Finance Editor, Kaeltripton

Published 4 Apr 2026

Last reviewed 4 May 2026

✓ Fact-checked

By Chandraketu Tripathi | Updated April 2026

The UK VAT threshold is £90,000 of taxable turnover in any rolling 12-month period for 2026-27. When your sales exceed this level, you must register for VAT with HMRC — typically within 30 days. Getting this right is critical: late VAT registration triggers financial penalties and means you owe VAT on past sales even if you didn't charge customers for it.

Key Facts

VAT threshold 2026-27: £90,000 | Deregistration threshold: £88,000 | Threshold basis: rolling 12-month taxable turnover | Registration deadline: 30 days after exceeding threshold | Late registration penalty: 2–15% of VAT owed

UK VAT Threshold History

Source: HMRC, GOV.UK. The threshold was frozen at £85,000 for several years before the April 2024 increase.
Tax Year	Registration Threshold	Change
2021-22	£85,000	Frozen
2022-23	£85,000	Frozen
2023-24	£85,000	Frozen
2024-25	£90,000	Increased from £85,000 (April 2024)
2025-26	£90,000	Frozen
2026-27	£90,000	Frozen

How to Calculate If You've Hit the VAT Threshold

The VAT threshold is not based on your calendar year or tax year — it is a rolling 12-month calculation. At the end of each month, add up all taxable turnover for the previous 12 months. If the total exceeds £90,000, you must register. Taxable turnover includes: standard-rated sales (20%), reduced-rate sales (5%), and zero-rated sales (0%). It excludes: VAT-exempt supplies, one-off sales of business assets, and VAT itself.

What Counts Toward the VAT Threshold?

Counts Toward Threshold	Does NOT Count
Standard-rated sales (20%)	VAT-exempt supplies (insurance, education, healthcare)
Reduced-rate sales (5%)	Sales of business assets (e.g. selling your old van)
Zero-rated sales (0%) — e.g. food, books	Grants and donations
Goods sent to EU/international customers	Wages and salaries received as an employee

Penalties for Late VAT Registration UK

Source: HMRC. Penalties apply to the net VAT due from the date you should have registered. HMRC also charges interest on late VAT payments.
How Late	Penalty (% of VAT Due)
Up to 9 months late	2%
9–18 months late	5%
18–27 months late	10%
More than 27 months late	15%

Voluntary VAT Registration Below £90,000

You can register for VAT voluntarily even if your turnover is below £90,000. This makes sense if: most of your customers are VAT-registered businesses who can reclaim the VAT (so the 20% addition is neutral for them), you make significant purchases with VAT on them (allowing you to reclaim input tax), or you want to present a more established business image. The downside: if your customers are consumers or non-VAT businesses, charging VAT makes you 20% more expensive than unregistered competitors.

Frequently Asked Questions

What is the VAT threshold in the UK for 2026?

The UK VAT registration threshold for 2026-27 is £90,000 of taxable turnover in any rolling 12-month period. This was introduced in April 2024 (raised from £85,000) and has been frozen. You must register for VAT within 30 days of exceeding this threshold or if you expect to exceed it in the next 30 days.

How do I calculate if I've exceeded the VAT threshold?

The VAT threshold is calculated on a rolling 12-month basis — not the calendar year or tax year. At the end of each month, look back at the last 12 months of taxable turnover. If the total exceeds £90,000, you must register. Example: if your turnover for May 2025 to April 2026 exceeds £90,000, you must register by 30 May 2026 and charge VAT from 1 June 2026.

What happens if I exceed the VAT threshold and don't register?

HMRC will register you for VAT compulsorily and may charge penalties for late registration. You will owe VAT on all taxable sales from the date you should have registered, even if you did not charge customers VAT — meaning you absorb the cost yourself. Penalties range from 2–15% of the VAT owed depending on how late the registration was.

Is the VAT deregistration threshold different from the registration threshold?

Yes. The VAT registration threshold is £90,000. The VAT deregistration threshold is £88,000. If your taxable turnover falls below £88,000 and you expect it to stay below that level, you can voluntarily deregister. You cannot deregister simply because you dropped just below the £90,000 registration threshold.

Does the VAT threshold apply to total revenue or profit?

The VAT threshold applies to taxable turnover — total revenue from taxable sales — not profit. This includes standard-rated and zero-rated sales but excludes VAT-exempt supplies. If you sell both VAT-exempt services (like insurance) and standard-rated products, only the standard-rated and zero-rated sales count toward the threshold.

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Disclaimer: Tax rates and allowances change annually. Always verify with HMRC or a qualified accountant. Sources: GOV.UK, HMRC, House of Commons Library, DS Burge & Co, Rest Less, Phinch.co.uk, Morningstar UK. April 2026.