Current VAT Threshold
£90,000
Registration required if turnover exceeds this in any 12-month period
If your business turnover is growing, you need to know when you must register for VAT. This complete guide covers the 2025-2026 VAT threshold, how to calculate your turnover, and what happens if you exceed the limit.
The VAT threshold is the turnover limit set by HMRC above which businesses must register for VAT. It's one of the most important numbers for growing UK businesses to monitor.
£90,000
Taxable turnover in any rolling 12-month period
If your business's taxable turnover exceeds £90,000 in any 12-month period, or you expect it to exceed this amount in the next 30 days alone, you must register for VAT.
The threshold is calculated on a rolling 12-month basis, not by financial or calendar year.
You must also register if you expect turnover to exceed £90,000 in the next 30 days alone.
The VAT threshold has remained at £90,000 since 1 April 2024. Prior to this, it was £85,000 (from 1 April 2017 to 31 March 2024).
The government reviews the threshold periodically, typically in the Spring Budget, but there's no guarantee it will increase annually.
Looking back at the past 12 months
At the end of any month, your taxable turnover for the previous 12 months exceeded £90,000.
Example:
On 31 May 2025, you calculate that your turnover from 1 June 2024 to 31 May 2025 was £92,000. You exceeded the threshold on 31 May 2025 and must register for VAT within 30 days.
Deadline: You have 30 days from the end of the month in which you exceeded the threshold to register for VAT.
Looking forward at the next 30 days
At any time, you have reasonable grounds to believe that your taxable turnover will exceed £90,000 in the next 30 days alone (not counting any turnover already made).
Example:
You win a contract worth £95,000 that will be invoiced and delivered within the next 30 days. Even if your previous 12-month turnover was only £50,000, you must register for VAT immediately.
Important: You must register before the 30-day period begins, not after.
Include:
Standard-rated sales (20% VAT)
Include:
Reduced-rate sales (5% VAT)
Include:
Zero-rated sales (0% VAT)
Exclude:
Exempt sales (e.g., insurance, education)
Exclude:
Sale of capital assets
Exclude:
VAT itself (use ex-VAT figures)
Calculate your turnover excluding VAT. For example, if you invoice £120 including 20% VAT, the taxable turnover is £100.
£88,000
Taxable turnover threshold for deregistration
If your turnover falls below £88,000, and you expect it to stay below this level, you can voluntarily deregister from VAT.
Yes! Even if your turnover is below £90,000, you can choose to register for VAT voluntarily. This can be beneficial in certain circumstances.
1. B2B Sales
If your customers are VAT registered, they can reclaim the VAT, so it doesn't affect them.
2. High Expenses
If you buy a lot of VAT-able goods/services, you can reclaim that input VAT.
3. Professional Image
Being VAT registered can make your business appear more established.
1. B2C Sales
Consumers can't reclaim VAT, so you'd need to absorb it or increase prices by 20%.
2. Low Expenses
If you have few VAT-able purchases, there's little VAT to reclaim.
3. Administrative Burden
VAT returns and record-keeping add time and complexity.
Failing to register for VAT when required can result in serious penalties:
You'll owe all the VAT you should have charged from when you exceeded the threshold
Up to 15% penalty of the VAT owed, plus interest charges
Register on time to avoid penalties and complications!
VAT registration is done online through HMRC. The process typically takes 2-3 weeks, and you'll receive your VAT registration number by post.
Register online with HMRC
Use the government gateway to submit your VAT registration application
Provide business details
Company information, business activity, expected turnover, and start date
Choose your VAT scheme
Standard, Flat Rate, Cash Accounting, or Annual Accounting Scheme
Receive your VAT number
Usually within 2-3 weeks by post, along with your registration certificate
Start charging VAT and keeping records
Update invoices, set up MTD-compatible software, and begin VAT record-keeping
Pro Tip: We recommend registering as soon as you know you'll exceed the threshold. Don't wait until the last minute to avoid complications.
Registration Threshold: £90,000 taxable turnover in any 12-month period
30-Day Rule: Register if you expect to exceed £90k in the next 30 days alone
Deregistration Threshold: £88,000 - you can deregister if turnover falls below this
Voluntary Registration: Possible below £90k if beneficial for your business
Registration Deadline: 30 days from when you exceed the threshold
At Taxwise Accountancy, we help businesses navigate VAT registration, ensuring you register at the right time and choose the most beneficial VAT scheme for your circumstances.
Complete VAT registration support and guidance
Track when you're approaching the threshold
Whether you're approaching the threshold or considering voluntary registration, our expert accountants provide tailored VAT advice and handle the registration process for you.
You still need to register if your turnover exceeds £90,000 in any 12-month period, even if it drops afterwards. However, you can deregister later if it falls below £88,000.
No. Calculate turnover excluding VAT. If you're not yet VAT registered, use the ex-VAT price you would charge.
Yes, you can register voluntarily at any time, even with zero turnover. This is useful if you want to reclaim VAT on startup costs.
You'll owe backdated VAT, penalties, and interest. Register as soon as you realize the oversight and contact HMRC to minimize penalties.