The UK VAT registration threshold in 2026: still £90,000, with an £88,000 exit

The VAT registration threshold in 2026 is £90,000 of taxable turnover in any rolling 12-month period — the same figure that has applied since 1 April 2024, with no change announced for 2026. A business already registered can apply to deregister once its taxable turnover is expected to fall below £88,000. Both figures sound simple, and the arithmetic is; the part that catches businesses out is the word "rolling" — this is not a once-a-year check against a tax year, but a test that has to be run every single month against the trailing twelve.

The two thresholds that matter in 2026

Both figures are published directly by HMRC on GOV.UK's VAT registration guidance and on the page covering cancelling a VAT registration. The gap between the two — £2,000 — is deliberate: it stops a business hovering right at £89,000–£91,000 from flipping in and out of VAT registration every few months as ordinary trading swings push turnover just above and just below a single figure.

Why "rolling 12 months" trips people up

The registration test is not "how much did I turn over last tax year" or "how much will I turn over this calendar year." It is: at the end of every month, add up taxable turnover for that month and the eleven before it. If that trailing total goes over £90,000, registration is required within 30 days of the end of the month in which it happened — regardless of where that month falls in the business's own financial year. A business with a big December, for instance, might cross the threshold checking its January-to-December total even though its accounting year runs April to March. There is a second, separate test that runs alongside it: if a business expects turnover in the next 30 days alone to exceed £90,000 — a single large contract signed, for example — it must register immediately, not wait for the rolling 12-month figure to catch up.

Taxable turnover for this test includes standard-rated, reduced-rated and zero-rated sales — a business selling entirely zero-rated goods (most food, for instance) still has to count that turnover toward the threshold, even though no VAT is actually charged on it. Turnover that is exempt from VAT altogether, and income from selling capital assets, does not count.

A threshold that was frozen once already, then raised

The current figure is not a fresh 2026 decision; it is a carry-over from a change made two Budgets ago.

The threshold was frozen at £85,000 for seven straight years before the Spring Budget 2024 raised it, alongside the deregistration threshold, which moved from £83,000 to £88,000 at the same time — set out in HMRC's own policy paper on increasing the registration and deregistration thresholds. Both figures have stood still since, through the Autumn Budget 2024 and the Autumn Budget 2025, even while several other UK tax thresholds were frozen for years further into the future over the same period.

A worked example of the rolling test

A sole trader turns over £7,000 to £8,500 most months, but has a strong run from September to December. Checking the trailing 12 months at the end of each month:

Crossing the threshold at the end of November means registering within 30 days of that month-end — by the end of December — with the VAT registration effective from 1 January, not backdated to when turnover first edged past £90,000 partway through November. Once registered, VAT has to be charged on sales from that effective date and paid across to HMRC, whether or not it was added to prices at the time. The VAT calculator adds VAT onto a net price or extracts it from a gross one at the current 20% UK rate, useful for working out what a price needs to become once registration takes effect.

Registering before the threshold is reached

Any business can register for VAT voluntarily, whatever its turnover. The case for doing so early is reclaiming VAT paid on purchases and setup costs, and looking more established to VAT-registered business customers who expect a VAT invoice. The case against is the added administration — quarterly returns, and for most businesses, Making Tax Digital record-keeping — and, for a business selling mainly to consumers rather than other VAT-registered businesses, an effective 20% price rise unless margins can absorb it instead. Which way that trade-off falls depends entirely on who the customers are and what the cost base looks like, which is a decision worth making with an accountant rather than on the threshold figure alone.

What registering actually changes day to day

Crossing £90,000 is a turnover test, but registering changes how a business operates, not just how it reports. Every invoice to a customer needs VAT added at the correct rate and shown separately, a VAT return has to be filed — usually quarterly — through Making Tax Digital-compatible software rather than a spreadsheet or a paper form, and records of both sales and purchases need to be kept digitally in a format that software can read. None of that is optional once registered, regardless of how small the business remains, which is part of why some businesses time investment in accounting software to coincide with registration rather than adding it afterward under pressure.

The other change is cash flow. VAT charged to customers is not the business's money even while it sits in the bank account waiting for the next return — it belongs to HMRC from the moment it is collected. A business used to treating the full amount on an invoice as revenue can find registration tightens available cash noticeably in the first quarter, even though the underlying trading has not changed at all.

Sources

• GOV.UK: Register for VAT
• GOV.UK: Cancel your VAT registration
• HMRC: VAT — increasing the registration and deregistration thresholds

This is general information, not tax advice. VAT rules have exceptions for specific sectors, distance selling and businesses based outside the UK, none of which are covered here. For a decision about registering, deregistering or how VAT applies to a specific business, speak to a regulated accountant or HMRC directly.