What is the VAT registration threshold in 2026/27?

Full answer

The **VAT registration threshold** is the level of taxable turnover above which you must register for VAT with HMRC. **2026/27 VAT thresholds:** | Threshold | Amount | |---|---| | Registration (mandatory) | **£90,000** | | Deregistration (can deregister) | **£88,000** | **What counts as "taxable turnover":** Taxable turnover includes sales of VAT-rated goods and services (standard 20%, reduced 5%, zero 0%) — but NOT exempt supplies (rent on residential property, financial services, insurance, postage stamps). **Rolling 12-month test:** You must monitor your taxable turnover on a rolling 12-month basis (not just the calendar or tax year). Once the cumulative total exceeds £90,000 in any 12-month period, you must: 1. Register within **30 days** of the end of the month in which you exceeded the threshold 2. Start charging VAT from the date you should have been registered **Voluntary registration:** You can register voluntarily even below £90,000 — useful if your customers are mainly VAT-registered businesses (who can reclaim the VAT), or if you have significant VAT costs you wish to reclaim. **VAT accounting schemes:** - **Flat Rate Scheme:** Fixed percentage of gross turnover paid to HMRC (varies by sector, e.g. IT contractors 14.5%, caterers 12.5%) - **Cash Accounting:** Pay/reclaim VAT based on cash received/paid (not invoice date) — improves cash flow - **Annual Accounting:** One annual VAT return with advance payments **Postponed VAT Accounting (PVA):** Since Brexit (Jan 2021), UK importers can account for import VAT via their VAT return rather than paying at the border — a significant cash flow benefit.

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