Self-Employment Guide -- Updated July 2026
VAT Registration Threshold Guide 2026/27
Cross £90,000 of taxable turnover in any rolling 12-month period and you must register for VAT within 30 days. Here is how the threshold test actually works, and when voluntary registration below it can make sense.
The £90,000 Threshold
For 2026/27 the VAT registration threshold is £90,000 of taxable turnover. Taxable turnover broadly means your total sales of standard-rated, reduced-rated and zero-rated goods and services -- it does not include VAT-exempt sales, or sales that are entirely outside the scope of VAT. Once your taxable turnover crosses £90,000 on the rolling basis described below, or you expect it to exceed £90,000 in the next 30 days alone, registration becomes compulsory rather than optional.
How the Rolling 12-Month Test Works
The threshold is not tested against your accounting year or the tax year -- it is tested on a rolling basis. At the end of every month, you need to add up your taxable turnover for the trailing 12 months (that month plus the previous 11). If that trailing 12-month total goes over £90,000, you have crossed the threshold at that point, regardless of where you are in your business's own financial year. This means the check needs to happen monthly, not just once a year at your accounts date, particularly for a growing or seasonal business.
The Deadline to Register
Once you have crossed the threshold on the rolling 12-month basis, you must register within 30 days of the end of the month in which you crossed it, and your registration takes effect from the first day of the second month after you crossed the threshold. There is also a separate, forward-looking test: if you expect your taxable turnover to exceed £90,000 in the next 30 days alone (for example, because of one very large contract), you must register by the end of that 30-day period, with your effective date of registration being the date you first realised this, which can be earlier than under the rolling 12-month test.
What Happens If You Register Late
HMRC can charge a penalty for late registration, calculated with reference to the VAT that should have been charged and how late the registration was made. On top of any penalty, you remain liable for the VAT you should have charged from your correct effective registration date onwards, even if you did not actually add VAT to your prices or invoices at the time -- meaning you may have to absorb that VAT out of income you have already received, rather than recovering it retrospectively from customers. Regularly checking your rolling turnover is the best way to avoid this.
Voluntary Registration
You can register for VAT voluntarily even if your turnover is well below £90,000. The main reasons businesses do this are to reclaim VAT on purchases, equipment and start-up costs, and because their customers are themselves VAT-registered businesses who can reclaim any VAT charged, making the added VAT largely cost-neutral to them. Voluntary registration is generally less attractive if most of your customers are members of the public or VAT-exempt businesses who cannot reclaim the VAT you charge, since your prices effectively rise by the VAT amount from their perspective.
What Changes Once You Are Registered
Once registered, you must charge VAT on your taxable sales at the appropriate rate (20% standard, 5% reduced, or 0% zero-rated, depending on what you sell), issue proper VAT invoices, keep digital records under Making Tax Digital for VAT, and submit VAT returns -- usually quarterly -- reporting the VAT you charged customers (output tax) less the VAT you paid on business purchases (input tax), paying HMRC the net amount due or claiming a refund if input tax exceeds output tax. Some smaller businesses use simplified schemes, such as the VAT Flat Rate Scheme, to reduce the administrative burden of standard VAT accounting.