- The VAT registration threshold is £90,000 of taxable turnover, frozen into 2026.
- It is a rolling 12-month figure, not your accounting year or the tax year.
- A separate forward-look test catches you if you expect to pass £90,000 in the next 30 days alone.
- Zero-rated sales count towards the threshold. VAT-exempt and out-of-scope income do not.
- You can deregister if turnover is expected to stay below £88,000.
Check where you stand
The current threshold
The VAT registration threshold is £90,000. It rose from £85,000 on 1 April 2024, the first increase in seven years, and is frozen at £90,000 through 2025/26 and into 2026.
The deregistration threshold is £88,000. If your taxable turnover falls below this, you can apply to come off the VAT register.
The rolling 12-month test
The threshold is not your accounting year or the tax year. It is a rolling 12 months. At the end of every month you look back at the previous 12 months' taxable turnover. The moment that figure exceeds £90,000, you have crossed the threshold.
If you cross it, you must register within 30 days of the end of the month in which you went over, and your registration takes effect from the first day of the second month after you exceeded it.
Worked example: your rolling 12-month turnover hits £91,000 at the end of August. You must register by 30 September, and you are VAT-registered from 1 October.
The 30-day forward look
There is a second trigger that catches people out. If at any point you expect your taxable turnover to exceed £90,000 in the next 30 days alone, for example because you win a single large contract, you must register immediately, with effect from the date you formed that expectation.
This forward-look test stands on its own. You can be required to register even if your rolling 12-month total is still well under £90,000.
What counts as taxable turnover
Taxable turnover is the total value of everything you sell that is not VAT-exempt or outside the scope of UK VAT. It includes:
- Standard-rated, reduced-rated and zero-rated sales (zero-rated still counts towards the threshold)
- Goods you hire or loan out
- Business goods used for personal reasons
- Services received from abroad that you have to "reverse charge"
It excludes VAT-exempt supplies (such as most insurance, finance, and certain education and health services) and genuinely out-of-scope income.
Registering voluntarily below the threshold
You can register before you hit £90,000. Whether that helps depends on who your customers are:
- If your customers are VAT-registered businesses, voluntary registration lets you reclaim VAT on your costs while your customers simply reclaim the VAT you charge them, often a net win.
- If your customers are consumers or non-VAT-registered, adding 20% to your prices (or absorbing it) usually hurts, because they cannot reclaim it.
Voluntary registration also lets you reclaim VAT on certain pre-registration purchases, up to four years back for goods you still hold, and six months for services.
Deregistration at £88,000
If your taxable turnover drops and you expect it to stay below £88,000 over the next 12 months, you can apply to deregister. You would then stop charging VAT, but you also stop reclaiming it, and you may owe VAT on assets you still hold above a small threshold.
Sitting just under £90,000 to avoid registering is a real strategic decision for many sole traders and small companies. Modelling the take-home impact of crossing the threshold, before you take that next contract, is exactly what Take Home is built to show you.