What is the VAT deregistration threshold in 2026/27?

Full answer

While the VAT registration threshold (the point at which registration becomes compulsory) is £90,000 of taxable turnover in any rolling 12-month period, the deregistration threshold is set slightly lower, at £88,000 for 2026/27. This gap between the two thresholds is deliberate, designed to prevent businesses whose turnover fluctuates narrowly around £90,000 from having to repeatedly register and deregister within short periods. If your VAT-taxable turnover for the next 12 months is expected to be £88,000 or less, you can apply to HMRC to deregister voluntarily -- this is optional, not compulsory, so a business can choose to remain VAT registered even with turnover below £88,000 if it prefers to continue reclaiming VAT on purchases or maintain the professional appearance of being VAT registered to business clients. Once deregistered, you stop charging VAT on your sales and stop submitting VAT returns, but you must account for VAT on the deemed sale of any business assets you still hold above a de minimis value at the point of deregistration, since you effectively received VAT relief on them while registered. Deregistering can make sense for a small business whose main customers are individual consumers (who cannot reclaim VAT themselves), since removing VAT from prices can make the business more price-competitive, though it also means losing the ability to reclaim VAT on business purchases and expenses going forward.

More answers

• What is the VAT registration threshold for 2026/27?
• Do I need to register for VAT once my turnover reaches £90,000?