VAT Thresholds 2026: When Do You Need to Register

The Key Numbers for 2026/27

For the 2026/27 tax year, the VAT thresholds are:

• Registration threshold: £90,000 — you must register if your taxable turnover exceeds this in any rolling 12-month period
• Deregistration threshold: £88,000 — you can deregister if your turnover falls below this
• Flat Rate Scheme limit: £150,000 (excluding VAT) to join; must leave if total income exceeds £230,000 (including VAT)

These figures apply to your VAT taxable turnover — the total value of everything you sell that isn't VAT-exempt. Zero-rated sales count towards the threshold even though VAT is charged at 0%.

The Rolling 12-Month Test

The £90,000 threshold isn't based on your accounting year or the tax year. HMRC uses a rolling 12-month period, checked at the end of every month.

At the end of each month, add up your total VAT taxable turnover for the previous 12 months. If it exceeds £90,000, you must register.

Example

Your monthly sales figures:

| Month | Sales | Rolling 12-Month Total | |-------|-------|----------------------| | Apr 2025 | £7,000 | £78,000 | | May 2025 | £7,500 | £79,500 | | Jun 2025 | £8,000 | £81,500 | | Jul 2025 | £8,500 | £84,000 | | Aug 2025 | £8,000 | £86,000 | | Sep 2025 | £7,500 | £87,500 | | Oct 2025 | £9,000 | £90,500 |

At the end of October, your rolling 12-month total exceeds £90,000. You must notify HMRC within 30 days (by 30 November) and your registration is effective from 1 November or an earlier agreed date.

The Forward-Looking Test

Separately from the rolling test, you must register if you expect your taxable turnover to exceed £90,000 in the next 30 days alone. This catches businesses that land a single large contract.

What Counts as Taxable Turnover?

• Standard-rated supplies (20%): Yes
• Reduced-rate supplies (5%): Yes
• Zero-rated supplies (0%): Yes — these still count
• Exempt supplies: No — these don't count towards the threshold
• Sales of capital assets: Generally excluded from the threshold calculation (but check specific rules)

Monitoring Your Threshold

The most common mistake is not monitoring your rolling turnover frequently enough. If you only check annually, you could breach the threshold months before you notice.

With Accounted, Penny tracks your rolling 12-month turnover continuously and alerts you when you're approaching the £90,000 threshold, giving you time to prepare.

What If You're Close to the Threshold?

If your turnover is hovering around £90,000, you have a few options:

1. Register voluntarily before you breach. This gives you control over timing and avoids any risk of late registration penalties.
2. Monitor carefully and register when required. Keep detailed monthly records.
3. Consider whether voluntary registration makes sense. If your customers are VAT-registered, they'll reclaim the VAT you charge, so it doesn't increase their costs.

See our guide on voluntary VAT registration for a full analysis.

Never breach the VAT threshold without knowing. Start your free trial with Accounted and let Penny monitor your turnover for you.