When Do I Have to Register for VAT in 2026/27?

You must register for VAT once your taxable turnover for any rolling 12-month period goes over £90,000 — the registration threshold that continues to apply in the 2026/27 tax year. You must also register if you expect your taxable turnover to pass £90,000 in the next 30 days alone. Registration below the threshold is voluntary, and once registered you follow Making Tax Digital for VAT, filing returns through compatible software, usually every quarter.

What counts towards the £90,000 threshold?

The threshold is measured against your taxable turnover — the total value of everything you sell that is not VAT-exempt. That includes standard-rated, reduced-rated and zero-rated sales, so a business selling mostly zero-rated goods (most food, children’s clothes) can still cross the threshold even though it charges no VAT on those sales.

Two common misunderstandings catch business owners out:

• It is a rolling 12 months, not your accounting year. At the end of every month you should look back over the previous 12 months. The test is never “turnover in this tax year” or “turnover since incorporation”.
• It is turnover, not profit. A business with £95,000 of sales and £60,000 of costs is over the threshold, even though its profit is modest.

When exactly do you have to register?

The rolling 12-month test

If your taxable turnover for the last 12 months goes over £90,000, you must register within 30 days of the end of the month in which you went over. Your registration takes effect from the first day of the second month after you crossed the line. For example, if you pass £90,000 on 15 July 2026, you must register by 30 August 2026 and your effective date of registration is 1 September 2026.

The 30-day forward look

Separately, if you realise your taxable turnover will go over £90,000 within the next 30 days on its own — say you win one unusually large contract — you must register by the end of that 30-day period, and your effective date is the date you realised, not the date the money arrives.

Register late and HMRC will still expect VAT on everything you sold from the date you should have been registered, and a penalty may be added on top. If you are close to the line, check the official guidance on when to register for VAT on GOV.UK or speak to an accountant before the month end.

What happens once you are registered?

From your effective date you charge VAT on your taxable sales — 20% standard rate for most goods and services, 5% reduced rate for items such as home energy, and 0% for zero-rated supplies — and you can reclaim the VAT you are charged on most business purchases.

All VAT-registered businesses are within Making Tax Digital (MTD) for VAT, which means keeping digital records and submitting returns through MTD-compatible software rather than typing figures into the HMRC website. Most businesses file quarterly, and both the return and the payment are due one calendar month and 7 days after the end of the VAT quarter — a quarter ending 30 November 2026 must be filed and paid by 7 January 2027.

Miss deadlines and you collect late-submission penalty points: on quarterly returns, a £200 penalty is charged once you reach 4 points, and each further late return while you stay at the threshold triggers another £200.

Worked example: crossing the threshold in 2026/27

Amira runs a limited company supplying marketing services. Her rolling 12-month turnover passes £90,000 on 15 July 2026, so she registers by 30 August 2026 with an effective date of 1 September 2026.

In her first full VAT quarter (September to November 2026) she invoices £30,000 of net fees, so she adds £6,000 of output VAT at 20%, billing clients £36,000 in total. Over the same quarter she pays £1,500 of VAT on software, equipment and other business costs. Her first return, due by 7 January 2027, shows £6,000 of output VAT less £1,500 of input VAT — a payment to HMRC of £4,500. Because her clients are VAT-registered businesses that reclaim the VAT she charges, her prices are effectively unchanged for them — the position is different for businesses selling to the public, who often have to absorb some of the VAT.

Should you register before you have to?

Voluntary registration can make sense if your customers are mainly VAT-registered businesses and you incur meaningful VAT on your own costs, since you can reclaim it. It is usually unattractive if you sell to consumers, because adding 20% to your prices (or absorbing it) hits margins. Some smaller businesses also weigh up the Flat Rate Scheme once registered — you can compare the options with our free VAT & Flat Rate Scheme calculator.

Making Tax Digital is widening in 2026

MTD no longer stops at VAT. From 6 April 2026, sole traders and landlords with qualifying income over £50,000 must follow Making Tax Digital for Income Tax — digital records plus quarterly updates to HMRC. If you are a sole trader approaching the VAT threshold, there is a good chance both regimes now apply to you, which makes getting your record-keeping software right once, for both, the sensible move.

If quarterly filings are the part of VAT you would rather hand over, our VAT returns service in London handles registration, scheme selection and every MTD submission for you.

Frequently asked questions

Do zero-rated sales count towards the VAT registration threshold?

Yes. Taxable turnover includes standard, reduced and zero-rated sales. Only VAT-exempt income and income outside the scope of VAT is left out of the £90,000 test.

What if I go over £90,000 temporarily?

If you cross the threshold because of a one-off spike and can show HMRC that your taxable turnover will stay below the deregistration threshold of £88,000 over the next 12 months, you can apply for an exception from registration — but you must apply, not simply ignore it.

Can I deregister if my turnover falls?

Yes. If your taxable turnover drops below £88,000 you can ask HMRC to cancel your registration voluntarily, though many businesses stay registered to keep reclaiming input VAT.

Written by the Accountactical Team — ACCA-Approved Accountants, London.

This article is general information for UK small-business owners, not formal tax advice — speak to a qualified accountant about your own circumstances before acting.