Key takeaways
- You must register for VAT if your taxable turnover goes over £90,000 in any rolling 12-month period, or you expect it to in the next 30 days alone.
- Budget 2026 keeps the registration threshold at £90,000 and the deregistration threshold at £88,000 from April 2027, the same as from April 2026.
- The test runs on a rolling 12 months, not the tax year or your accounting year, so you need to check it at the end of every month.
- If you go over on the backward-looking test, you have 30 days from the end of that month to register, and your registration starts on the first day of the second month after you went over.
- Taxable turnover includes zero-rated and reduced-rated sales but excludes VAT-exempt sales, out-of-scope income and sales of capital assets.
- If you go over only temporarily, you can apply to HMRC for an exception if you can show turnover will not exceed £88,000 in the next 12 months.
- Overseas businesses with no UK establishment get no threshold and must register on their first UK taxable supply.
The VAT registration threshold is £90,000 of taxable turnover. You must register if your turnover goes over £90,000 in any rolling 12-month period, or if you expect it to go over in the next 30 days alone. Budget 2026 on 28 October 2026 confirmed the threshold stays at £90,000 from April 2027.
What is the VAT threshold for 2026/27?
The registration threshold is £90,000 and the deregistration threshold is £88,000. Both have applied since 1 April 2024, according to HMRC’s Notice 700/1 supplement, and Budget 2026 Annex A shows the same figures from April 2027.
| Threshold | From April 2026 | From April 2027 |
|---|---|---|
| Registration | £90,000 | £90,000 |
| Deregistration | £88,000 | £88,000 |
| Overseas business, no UK establishment | £0 | £0 |
Northern Ireland businesses distance selling goods to EU consumers have a separate threshold of £8,818 a calendar year. See VAT changes in Budget 2026 for the other measures announced.
How do the two registration tests work?
There are two tests, and you must register if either is met.
The backward-looking test. At the end of every month, add up your taxable turnover for the last 12 months. If it is over £90,000, GOV.UK says you must register within 30 days of the end of that month. Your effective date of registration is the first day of the second month after you went over.
The forward-looking test. If at any point you expect your taxable turnover in the next 30 days alone to go over £90,000, you must register by the end of those 30 days. Your effective date is the day you realised, not the day turnover actually went over.
| Example | Register by | Effective date |
|---|---|---|
| Rolling total passes £90,000 on 15 July | 30 August | 1 September |
| Sign a £100,000 contract on 1 May | 30 May | 1 May |
What counts as taxable turnover?
Taxable turnover is the value of everything you sell that is not VAT exempt or outside the scope of VAT. GOV.UK says it includes:
- standard-rated, reduced-rated and zero-rated sales
- goods you hire or lend out
- business goods used for personal reasons
- goods you barter, part-exchange or give away
- services you receive from overseas businesses under the reverse charge
- building work over £100,000 you do for your own business
It does not include:
- VAT-exempt sales, such as most insurance, finance and residential rents
- income outside the scope of VAT
- sales of capital assets such as equipment or vehicles, unless land or buildings under an option to tax
A business selling only zero-rated food still counts every sale. Check how your sales are rated in VAT rates and exemptions.
How to track your turnover each month
Tracking means running the 12-month test at every month end, not once a year. The tax year and your accounting year are irrelevant to it.
- Record total taxable sales for each calendar month.
- At each month end, add the latest 12 months together.
- Compare the total with £90,000.
- Flag when the total passes about £80,000, so you can plan prices and systems.
- Before signing any large contract, check whether the next 30 days alone would pass £90,000.
- If you go over, register within 30 days of that month end.
Our VAT threshold tracker does the rolling sum for you. Most accounting software can also run a 12-month sales report.
What if I go over only temporarily?
You can ask HMRC for an exception from registration. Notice 700/1, paragraph 3.7, says you must show your taxable turnover will not go over the £88,000 deregistration threshold in the next 12 months. Apply as early as possible with a full explanation, for example a one-off contract.
If HMRC refuses, you are registered from the date you became liable. Keep charging prices that allow for VAT until you have HMRC’s answer in writing.
What happens if I register late?
You must pay HMRC the VAT due on sales from the date you should have been registered, even if you did not charge it. You may also face a failure to notify penalty, based on how much you owe and how late you are. See HMRC failure to notify penalties.
Which applies to you?
- If your rolling 12 months is under £90,000, you do not have to register, but you can register voluntarily.
- If it passed £90,000 last month, register within 30 days of that month end.
- If one contract will take you over in 30 days, register now, effective from today.
- If you went over because of a one-off, apply for an exception.
- If you are an overseas business with no UK establishment, register before your first UK taxable sale.
- If your turnover falls below £88,000, you can apply to deregister.
Frequently asked questions
What is the VAT threshold in 2026?
£90,000 of taxable turnover in any rolling 12 months. The deregistration threshold is £88,000.
Is the VAT threshold going up in 2027?
No. Budget 2026 Annex A shows £90,000 for registration and £88,000 for deregistration from April 2027, unchanged from April 2026.
Is the VAT threshold based on the tax year?
No. It is a rolling 12-month test that you check at the end of every month, regardless of your tax year or accounting period.
Does zero-rated income count towards the VAT threshold?
Yes. Zero-rated sales are taxable supplies and count. Exempt and out-of-scope income does not.
How long do I have to register once I go over £90,000?
30 days from the end of the month in which you went over. Your registration then takes effect from the first day of the second month after that month.
Sources
Rates, thresholds and rules in this guide were checked against HMRC and GOV.UK guidance on 6 November 2026. Tax rules change, so check the current position on GOV.UK or with a qualified adviser before acting. This guide is general information, not personal advice.