VAT registration in the UK: when and how to register for the £90,000 threshold (2026/27)

If your business is growing nicely, the VAT threshold is the line in the sand most owners worry about long before they reach it. We work with builders in Rossendale, online retailers in Bacup and consultants across Lancashire who all hit the same wobble around £75,000 to £85,000 of turnover, when registration starts to feel real. The rules are not as scary as they sound, but the timing matters and missing the deadline is one of the easier ways to get an avoidable HMRC penalty.

What is the UK VAT registration threshold for 2026?

The compulsory VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. The figure rose from £85,000 to £90,000 on 1 April 2024 and has stayed there since, including for the 2026/27 tax year (HMRC: VAT thresholds).

“Rolling” is the part most people miss. It does not reset on 6 April. You look back at every consecutive 12-month window. The day your trailing 12 months of taxable turnover ticks past £90,000, the clock starts.

The deregistration threshold is £88,000, so once you are registered you can apply to come back off if your taxable turnover drops below that figure.

What counts as taxable turnover for the VAT threshold?

Taxable turnover is the total value of everything you sell that is not VAT exempt or outside the scope of VAT. That includes standard-rated, reduced-rated and zero-rated supplies. Exempt sales (such as some financial services, certain education and some property transactions) do not count towards the threshold.

A few things trip people up here. Sales of business assets you have used in your trade do count. Goods you import into the UK over the threshold can trigger registration on their own. Income from a separate self-employment or a connected business may need to be added together if HMRC considers it artificial separation.

If you are unsure whether a particular income stream is taxable for VAT purposes, list it out and check it before you assume it is exempt. Getting this wrong is a common reason businesses think they are under the threshold when they are not.

When do I have to register for VAT?

There are two separate triggers and you only need to hit one of them to be obliged to register.

The first is the historic test. If your taxable turnover for the last 12 months has gone over £90,000, you must register within 30 days of the end of the month in which you crossed the threshold. Your effective date of registration is the first day of the second month after you went over.

The second is the future test. If at any point you reasonably expect your taxable turnover in the next 30 days alone to exceed £90,000, you must register straight away. The effective date is the date you formed that expectation. This usually catches businesses landing one large contract that on its own takes them past the threshold.

Two further triggers catch out new business owners. If you take over an existing VAT-registered business as a going concern, you must register within 30 days of the transfer if the combined taxable turnover of the new and existing business is over the £90,000 threshold, including the previous owner’s turnover in the 12 months before the transfer. Separately, non-UK established businesses (where you and your business are based outside the UK) must register as soon as you make any taxable supplies in the UK, regardless of turnover.

How do I actually register for VAT with HMRC?

Most businesses register online through their HMRC business tax account at gov.uk/register-for-vat. You will need your company or sole trader details, your bank account, and an estimate of your taxable turnover for the next 12 months.

HMRC will give you a 9-digit VAT number and confirm your effective date of registration, your first VAT return period, and your filing deadlines. Expect this to take anywhere from a few days to a few weeks. Until your number arrives you cannot show VAT separately on invoices, but you must still account for VAT on your sales from your effective date, so most businesses temporarily increase prices by the VAT rate and then reissue invoices once the number comes through.

Once registered, you fall under Making Tax Digital for VAT. That means keeping digital records and filing returns through compatible software. We covered the practical side of this in our complete guide to Making Tax Digital.

Should I register for VAT voluntarily?

You can register for VAT at any turnover level if it suits your business. Voluntary registration is worth considering when:

• Most of your customers are themselves VAT registered, so the VAT you charge them is reclaimable and not a real cost to them
• You have significant input VAT to recover, for example a tradesperson buying materials, or a startup investing in equipment
• You want to look more established to larger clients, who sometimes equate a VAT number with a more substantial supplier
• You are close to the threshold anyway and would rather control the timing of registration than have it forced on you mid-quarter

Voluntary registration is rarely a good move when most of your customers are members of the public, because adding 20% VAT to your prices either eats your margin or makes you 20% more expensive overnight.

What happens if I miss the VAT registration deadline?

If you register late, HMRC will backdate your effective date of registration to the date you should have registered, and you will owe VAT on all your sales from that point onwards. They can also charge a failure-to-notify penalty, calculated as a percentage of the unpaid VAT, plus interest.

The penalty is usually higher if HMRC find the error before you do, and lower if you come forward voluntarily. We have helped clients sort late registrations after they realised they had been over the threshold for several months. The fix is rarely as bad as people fear, as long as you act quickly and disclose properly. Burying it is the only thing that genuinely makes it worse.

Are there any VAT schemes that make life easier?

Yes. HMRC runs several optional schemes that can simplify VAT for smaller businesses:

• Flat Rate Scheme: you pay a fixed percentage of your gross turnover instead of working out VAT on every sale and purchase. You can join if your taxable turnover is £150,000 or less and you must leave once your VAT-inclusive turnover exceeds £230,000
• Cash Accounting Scheme: you account for VAT when invoices are paid rather than when they are raised, which helps cash flow if customers pay slowly. The threshold to join is £1.35 million of taxable turnover
• Annual Accounting Scheme: you make estimated quarterly payments and submit one VAT return per year, useful for businesses with predictable income

The right scheme depends on your margins, your customers and how your business spends money. We always run the numbers under each option before recommending one, because the headline simplicity of the Flat Rate Scheme can sometimes cost you more than standard accounting would.

How does crossing the VAT threshold affect my prices?

This is the part that worries most growing business owners. If your customers are mostly other businesses that can reclaim VAT, the impact is largely administrative. If your customers are members of the public, you have a strategic decision to make.

You can absorb the VAT and keep your prices the same, which protects sales but reduces your margin by roughly 16.7% of your existing prices. You can pass it on in full and risk losing some price-sensitive customers. Or you can split the difference and lift prices partially while taking some of the hit yourself.

The right answer depends on your competition, your margin and how strong your brand is. Plan this conversation before you cross the threshold, not after, so you are not making a pricing decision under time pressure.

If you are approaching £90,000 of turnover, or you have already crossed it and are not sure what to do next, get in touch. We help small businesses across Rossendale, Bacup, Rawtenstall, Haslingden and the wider Lancashire and UK area register at the right time, choose the right scheme, and avoid the late-registration penalties that catch out so many growing companies. Book a free discovery call through our contact page and we will walk you through it.

Frequently asked questions

What is the VAT registration threshold in the UK in 2026?

The VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. The deregistration threshold is £88,000.

Do I have to register for VAT if I am a sole trader?

Yes. The VAT threshold applies to all businesses regardless of structure, including sole traders, partnerships and limited companies. It is based on the business’s taxable turnover, not your profit or salary.

How long does it take HMRC to issue a VAT number?

HMRC usually issues a VAT number within 10 to 30 working days of a complete online application, although it can take longer if they need additional information. Until you receive it, you must still account for VAT on your sales from your effective registration date.

Can I avoid VAT registration by splitting my business in two?

Generally no. HMRC has anti-avoidance rules to prevent artificial business separation, sometimes called “disaggregation”. If two businesses share customers, premises, staff or finances, HMRC can treat them as one for VAT purposes and add the turnovers together. Always take advice before restructuring to stay below the threshold.

Do you help Rossendale businesses with VAT registration?

Yes. We work with growing businesses in Rossendale, Bacup, Rawtenstall, Haslingden and across Lancashire and the UK to register for VAT at the right time, choose the most efficient scheme and stay compliant with Making Tax Digital. Get in touch for a free discovery call.