Figuring out when to register for VAT is one of the trickiest bits of running a growing UK business. The rules are not based on your tax year or your company accounts — they are based on two rolling tests that HMRC expects you to monitor all year round. Get the timing wrong, and you could owe VAT you never charged your customers, plus a penalty on top.
This guide explains the £90,000 registration threshold, the two tests that trigger compulsory registration what counts towards your taxable turnover, the deadlines and effective dates, penalties for late registration, and when you can deregister or register voluntarily. Rules current for 2026/27..
The £90,000 VAT registration threshold
You must register for VAT if your taxable turnover — the total value of your VAT-taxable sales, not your profit — goes over £90,000. This threshold has been in force since 1 April 2024, when it rose from £85,000, and it remains unchanged for 2026/27.
The word "taxable" matters. The threshold is not based on your profit, your bank balance, your total assets, or your Corporation Tax bill. A business with tiny margins but £95,000 of taxable sales must register; a business with £80,000 of sales and big profits does not have to.
If you are a sole trader running more than one business, HMRC normally combines their turnover — you cannot split sales to stay under the threshold.
Test 1: the rolling 12-month test (backward look)
The first test is the one that catches most growing businesses out. At the end of every calendar month, add up your taxable turnover for the previous 12 months. If the total is over £90,000, you must register.
This is a rolling window — not the tax year (April to April), not the calendar year, and not your company's accounting year. You cannot check once a year when your accounts are prepared; HMRC expects this check to be done continuously.
Worked example: rolling 12-month calculation
Imagine a plumbing business tracking monthly taxable sales (excluding VAT). At the end of November 2025, the 12-month rolling total is £88,600 — under the threshold, so no action needed. But once December 2025's £10,300 of sales is included, the 12-month window (January to December 2025) reaches £90,900. The threshold has been crossed.
You must register within 30 days of the end of December 2025 — by 30 January 2026. Your effective date of registration is the first day of the second month after you went over: 1 February 2026. From that date, VAT is chargeable on your sales, whether or not HMRC has finished processing your registration.
Test 2: the 30-day forward test (forward look)
The second test catches businesses that land a single large contract or a sudden spike. You must register if, at any point, you have reasonable grounds to believe your taxable turnover will exceed £90,000 in the next 30 days alone — even if your trailing 12-month total is nowhere near it.
This test is based on a forecast, not history, which makes it easy to overlook.
Worked example: the 30-day forward test
On 10 June 2026, you run a marketing agency with monthly sales of around £6,000. You win a new client and sign a £95,000 contract for a campaign running over the next few weeks.
The moment you sign, you have reasonable grounds to believe your taxable turnover in the next 30 days will exceed £90,000. You must register by the end of that 30-day period — by 10 July 2026 — and your effective date is the date you realised: 10 June 2026. You owe VAT on sales from 10 June onwards, including that £95,000 contract, even before your VAT number arrives.
What counts as "taxable turnover"
Taxable turnover is the total value of everything you sell that is not VAT-exempt or outside the scope of VAT. It includes:
- Standard-rated sales (20% VAT) — most goods and services
- Reduced-rated sales (5% VAT) — for example, domestic fuel and power
- Zero-rated sales (0% VAT) — for example, most food, children's clothes, books
- Goods you hire, loan, barter, part-exchange or give as gifts; business goods used for personal reasons; and services you "reverse charged" from overseas suppliers
It does not include:
- Exempt sales — for example, insurance, finance, some education and health services, and most property letting
- Out-of-scope sales — supplies outside the UK VAT system entirely
A common trap: businesses selling mostly zero-rated goods assume they are nowhere near the threshold. Zero-rated sales do count towards the £90,000. (If most of what you sell is zero-rated, you may be able to apply to HMRC for an exemption from registration — but you need HMRC's permission first.)
Registration deadlines and effective dates
The deadline and the effective date depend on which test triggered your registration:
| Trigger | Deadline to register | Effective date of registration |
|---|---|---|
| Rolling 12-month turnover went over £90,000 | Within 30 days of the end of the month you went over | First day of the second month after you went over |
| You expect to exceed £90,000 in the next 30 days alone | By the end of that 30-day period | The date you realised it would happen |
So for the 12-month test: if your turnover first goes over on 15 July, register by 30 August and your registration takes effect on 1 September. For the 30-day test: you realise on 1 May that you will go over, you apply by 30 May, and your effective date is 1 May (both are GOV.UK's worked examples).
Two special situations: a business based outside the UK supplying goods or services to the UK may have to register regardless of turnover — there is no £90,000 threshold for non-established taxable persons. And if your turnover goes over only temporarily, you can apply to HMRC for a registration "exception"; if refused, they will register you.
Penalties for late registration
If you register late, the VAT itself is the bigger problem — but there is also a penalty regime:
- You owe VAT from the date you should have registered, even on sales made before you applied and even if you never charged customers for it.
- HMRC may backdate your effective registration date to when it should have been, then assess the VAT due since that date.
- You may face a failure-to-notify penalty. GOV.UK says this depends on "how much you owe and how late your registration is" — it is a percentage of the relevant VAT due, not of your total turnover.
- Interest can also accrue on VAT that should have been paid earlier.
The practical lesson: if you discover you have gone over the threshold, do not wait. Register now and work out the correct effective date, because every month of delay adds to both the VAT bill and the potential penalty.
The £88,000 deregistration threshold
If you are already VAT-registered and your taxable turnover later falls, you can apply to HMRC to cancel your VAT registration once it drops below £88,000 — online if you have stopped trading, stopped making taxable supplies, or are below the £88,000 mark.
You must cancel within 30 days if you stop being eligible, or you may face a penalty. The gap between the two thresholds is deliberate — it stops businesses just above the line from registering and deregistering repeatedly.
Before you deregister, think about the downsides: you lose the ability to reclaim VAT on purchases, and you must account for VAT on stock or equipment you still hold when you cancel.
Voluntary registration: should you register early?
You can register voluntarily below £90,000 — a genuine strategic decision. It tends to pay off if you sell mainly to other VAT-registered businesses and have significant VAT-bearing costs (reclaiming input VAT, looking more established, getting admin done ahead of growth). It tends to cost if you sell mainly to consumers who cannot reclaim VAT: charging 20% makes you more expensive than non-registered competitors — and it adds quarterly returns and Making Tax Digital compliance.
How to register for VAT
Most businesses register online through the Government Gateway (HMRC's VAT online services). You do not have to finish the application in one go — you can save it and return later — and you can appoint an accountant to register for you.
Limited companies need: company registration number, business bank account details, UTR, annual turnover details, an estimate of taxable turnover for the next 12 months, and information about Self Assessment, Corporation Tax and PAYE. Sole traders and partnerships need: National Insurance number, an identity document (passport or driving licence), bank account details, UTR if you have one, turnover details and an estimate for the next 12 months, plus Self Assessment details and payslips or P60.
Register by post (form VAT1) instead if, for example, you are applying for a registration exception because the threshold was only breached temporarily, or you are joining the Agricultural Flat Rate Scheme.
What happens after you register
Once your application is processed, HMRC posts you your 9-digit VAT registration number (required on all invoices), confirmation of your effective date, and details of when to submit your first VAT return and payment, plus how to set up your business tax account.
From your effective date of registration you must:
- Charge VAT at the correct rate (20% standard, 5% reduced, 0% zero-rated) on your taxable sales
- Keep digital VAT records and submit returns using compatible software — HMRC automatically signs VAT-registered businesses up to Making Tax Digital for VAT unless exempt
- File VAT returns (usually quarterly) and pay what you owe
- Reclaim the VAT you have paid on business purchases (input VAT)
One timing trap: you cannot put VAT on invoices until you receive your VAT number, but VAT is owed from your effective date. If that gap matters, raise prices to cover the VAT you will owe, then reissue proper VAT invoices once the number arrives. GOV.UK's example: a £100,000 contract from 1 May means telling the customer about the 20% and raising a £120,000 invoice once the VAT number comes through.
Frequently asked questions
Is the VAT threshold £90,000 for 2026/27?
Yes — in force since 1 April 2024 and unchanged for 2026/27. The deregistration threshold is £88,000.
Is the VAT threshold based on profit or turnover?
Turnover — specifically taxable turnover. Profit, expenses and assets are irrelevant. Standard, reduced and zero-rated sales all count; exempt and out-of-scope sales do not.
Do I check the threshold once a year?
No — check at the end of every month, looking back at the previous 12 months. This rolling window — not your tax year or calendar year — is the most common reason businesses register late without realising it.
What if I go over the threshold just once, briefly?
You can apply to HMRC for a registration "exception" if the breach is genuinely temporary; if they refuse, they register you. If most of what you sell is zero-rated, you may instead apply for an exemption from registration.
Can I register for VAT as a sole trader below £90,000?
Yes — voluntary registration is open to any business. It lets you reclaim VAT on purchases and can help with B2B credibility, but it means charging VAT (usually 20%) on your sales and filing quarterly returns under Making Tax Digital.
What happens if I ignore the threshold and don't register?
HMRC can register you with a backdated effective date and assess VAT on all your taxable sales since that date — VAT you probably never collected from customers. You may also face a failure-to-notify penalty based on how much you owe and how late you are, plus interest on the overdue VAT.
Educational information and estimates. These tools do not submit VAT returns or determine the treatment of a specific transaction.