What is the UK VAT threshold in 2026?

£90,000 of taxable turnover in any rolling 12-month period (set from 1 April 2024 onwards). The deregistration threshold is £88,000.

Does the threshold apply to my financial year or rolling?

Rolling 12 months. At the end of every month you check whether your taxable turnover over the previous 12 months exceeded £90k. If yes, you must register within 30 days.

What counts as taxable turnover?

Sales of goods and services that would be subject to VAT (standard, reduced, or zero-rated). Exempt sales (most financial services, education, healthcare) and sales outside the scope of UK VAT don't count.

What if I expect to cross the threshold in the next 30 days?

Register immediately. The rule is: if at any point you reasonably expect your taxable turnover in the next 30 days alone to exceed £90,000, you must register from that day.

Can I voluntarily register below the threshold?

Yes. Worth doing if (a) you sell B2B and your customers are VAT-registered (they reclaim, you reclaim, everyone wins), (b) you have significant input VAT on equipment/stock you can reclaim, or (c) being VAT-registered makes you look more established.

What is the Flat Rate Scheme?

A simplified VAT scheme for small businesses. You charge customers 20% VAT but only hand a flat percentage of your gross turnover to HMRC — the percentage depends on your industry (8.5%-16.5%). The 1% discount in year 1 makes it especially attractive for new companies. Eligible up to £150k taxable turnover.

Should I pick Flat Rate or Standard?

Flat Rate wins if your input VAT is low (services, consultancy, software). Standard wins if you buy lots of vatable stock (retail, takeaways, manufacturing). Use our calculator below.

What about the Cash Accounting Scheme?

You only owe VAT to HMRC once a customer has paid you. Useful for businesses with slow payers. Eligible up to £1.35M turnover. Cashflow-friendly but you also can't reclaim input VAT until you've paid the supplier.

What about the Annual Accounting Scheme?

One return per year, with quarterly payments-on-account. Eligible up to £1.35M turnover. Reduces admin but you lose the smoothing of quarterly cashflow.

Do I need MTD for VAT?

Yes — Making Tax Digital for VAT is mandatory for all VAT-registered businesses (since April 2022). You need MTD-compatible software to submit returns. BahiKhata is MTD-ready.

How long does VAT registration take?

HMRC currently quotes 'up to 30 working days' — most online applications complete in 10-14 working days.

Can I deregister later?

Yes — if your rolling turnover drops below £88,000 and you don't expect it to bounce back above £90,000. File form VAT7 to deregister.

VAT

UK VAT registration threshold 2026 — when do you have to register?

Updated 17 May 2026

The UK VAT registration threshold rose to £90,000 on 1 April 2024 and hasn't moved since. This guide covers when you must register, when you might want to voluntarily, and how to pick the right scheme.

The £90,000 threshold

You must register for VAT if either:

Your taxable turnover in the last 12 rolling months exceeded £90,000, OR
You reasonably expect your taxable turnover in the next 30 days alone to exceed £90,000.

The deregistration threshold is £88,000 — a £2k gap to stop businesses bouncing in and out.

Rolling, not annual. At the end of every month, sum your last 12 months of taxable turnover. The instant it crosses £90k, you have 30 days to register.

When voluntary registration makes sense

You sell B2B: if your customers are VAT-registered, they reclaim the VAT you charge — your prices effectively don't go up. Meanwhile you reclaim VAT on all your input costs.
High input VAT: you've spent a lot on equipment, vehicles, stock, software. Voluntary registration lets you reclaim ~£10-£20k+ of historical input VAT (up to 4 years back for goods, 6 months for services).
Credibility: some larger clients won't work with non-VAT-registered suppliers. The number on your invoice signals scale.

When it doesn't make sense: you sell B2C to consumers and your competitors aren't VAT-registered. You'd be 20% more expensive overnight.

The four schemes — which one fits

Standard VAT

You charge 20% (or 5%/0% on reduced-rate items), reclaim 20% on inputs, file quarterly. Default for most.

Flat Rate Scheme (FRS)

You charge customers 20% but only hand a flat % of your gross turnover (including the VAT you charged) to HMRC. The flat percentage varies by industry: 8.5% (couriers, software, consultancy), 12% (catering), 16.5% (limited-cost traders). You also can't reclaim input VAT (except on capital purchases over £2k).

1% discount in your first year of registration. Eligible up to £150k turnover.

Cash Accounting Scheme

You account for VAT when money moves, not when invoices are issued. Helps cashflow if you have slow-paying customers, but you can't reclaim input VAT until you've paid the supplier. Eligible up to £1.35M.

Annual Accounting Scheme

One return per year, quarterly payments-on-account based on previous year. Reduces admin but loses cashflow smoothing. Eligible up to £1.35M.

Flat Rate vs Standard — quick test

Rough rule of thumb: if your VAT-able input costs are less than ~15-20% of your turnover, Flat Rate usually wins. If they're higher (e.g. retail buying lots of stock), Standard usually wins.

For a £50,000/year consultancy with £2,000/year of vatable inputs:

Standard: VAT charged £10,000, input VAT reclaimed £400, net to HMRC £9,600.
Flat Rate at 14.5% (consultancy): VAT charged £10,000, paid to HMRC 14.5% of £60,000 gross = £8,700. Net retained £1,300 vs Standard.

Run yours through our free VAT calculator, then bring your numbers into BahiKhata to see your live exposure and live next-quarter return.

Making Tax Digital (MTD) for VAT

MTD is mandatory for all VAT-registered businesses. You need:

A digital record of every sales and purchase line that goes into a VAT return.
MTD-compatible software (Xero, QuickBooks, FreeAgent, BahiKhata, etc.) that submits to HMRC via an API.
Each VAT return submitted from that software — not the old HMRC online portal.

BahiKhata is MTD-compatible: you import bank transactions, our categoriser flags VAT treatment per line, the 9-box engine generates the return, and we hand it off to HMRC via the MTD API.

Frequently asked

What is the UK VAT threshold in 2026?: £90,000 of taxable turnover in any rolling 12-month period (set from 1 April 2024 onwards). The deregistration threshold is £88,000.
Does the threshold apply to my financial year or rolling?: Rolling 12 months. At the end of every month you check whether your taxable turnover over the previous 12 months exceeded £90k. If yes, you must register within 30 days.
What counts as taxable turnover?: Sales of goods and services that would be subject to VAT (standard, reduced, or zero-rated). Exempt sales (most financial services, education, healthcare) and sales outside the scope of UK VAT don't count.
What if I expect to cross the threshold in the next 30 days?: Register immediately. The rule is: if at any point you reasonably expect your taxable turnover in the next 30 days alone to exceed £90,000, you must register from that day.
Can I voluntarily register below the threshold?: Yes. Worth doing if (a) you sell B2B and your customers are VAT-registered (they reclaim, you reclaim, everyone wins), (b) you have significant input VAT on equipment/stock you can reclaim, or (c) being VAT-registered makes you look more established.
What is the Flat Rate Scheme?: A simplified VAT scheme for small businesses. You charge customers 20% VAT but only hand a flat percentage of your gross turnover to HMRC — the percentage depends on your industry (8.5%-16.5%). The 1% discount in year 1 makes it especially attractive for new companies. Eligible up to £150k taxable turnover.
Should I pick Flat Rate or Standard?: Flat Rate wins if your input VAT is low (services, consultancy, software). Standard wins if you buy lots of vatable stock (retail, takeaways, manufacturing). Use our calculator below.
What about the Cash Accounting Scheme?: You only owe VAT to HMRC once a customer has paid you. Useful for businesses with slow payers. Eligible up to £1.35M turnover. Cashflow-friendly but you also can't reclaim input VAT until you've paid the supplier.
What about the Annual Accounting Scheme?: One return per year, with quarterly payments-on-account. Eligible up to £1.35M turnover. Reduces admin but you lose the smoothing of quarterly cashflow.
Do I need MTD for VAT?: Yes — Making Tax Digital for VAT is mandatory for all VAT-registered businesses (since April 2022). You need MTD-compatible software to submit returns. BahiKhata is MTD-ready.
How long does VAT registration take?: HMRC currently quotes 'up to 30 working days' — most online applications complete in 10-14 working days.
Can I deregister later?: Yes — if your rolling turnover drops below £88,000 and you don't expect it to bounce back above £90,000. File form VAT7 to deregister.