What's the UK VAT registration threshold 2026/27?

£90,000 of taxable turnover (raised from £85,000 in April 2024). Once UK turnover crosses £90,000 in any rolling 12-month period, you must register for VAT within 30 days. Deregistration threshold: £88,000 (drop below + stay below for 12 months to deregister).

Should I voluntarily register for VAT below £90k?

Depends on customer base. Voluntary registration makes sense if: customers are VAT-registered businesses (can reclaim VAT on your invoices), you have significant VAT-able expenses to reclaim, you sell to international customers (often zero-rated for VAT, but you can reclaim input VAT). Avoid voluntary registration if: customers are consumers (lose 20% margin), expenses are mostly VAT-free or low.

What is Flat Rate Scheme?

Simplified VAT for small businesses under £150k turnover. Pay flat % of gross turnover (sector-specific, typically 8-16%) instead of detailed VAT calculations. Cannot reclaim input VAT (except on capital purchases > £2,000). Useful for low-expense service businesses. First year of registration: 1% discount on standard rate.

What is Cash Accounting Scheme?

Standard VAT but reported on cash basis (when payment received/paid) rather than invoice basis. Improves cash flow - don't pay VAT until customer pays you. Eligibility: turnover under £1.35M to join, must leave when exceeds £1.6M. Most small businesses prefer this over invoice-basis VAT.

When does VAT registration hurt my business?

When customers are consumers (cannot reclaim VAT). Effectively 20% price rise to customers or 20% margin reduction to absorb VAT. Consumer-facing service businesses (hair, beauty, takeaway, etc.) often delay crossing £90k by adjusting prices/hours to stay below threshold. Some artificially split businesses (often challenged by HMRC).

What's the registration process?

Apply at gov.uk/register-for-vat. Requires: business details, Government Gateway account, anticipated turnover. HMRC issues VAT registration number within 30 days typically (sometimes longer for new businesses). From registration date: must charge VAT on taxable supplies + file quarterly VAT returns. First VAT return due ~5 weeks after first VAT quarter end.

How does Making Tax Digital affect VAT?

All VAT-registered businesses must use MTD-compatible software for VAT (since April 2022). Required: digital record-keeping, quarterly VAT returns submitted via API to HMRC, audit trail. Approved software: Xero, FreeAgent, QuickBooks, Sage, Coconut, many others. Bridging software available for spreadsheet users.

Can I register for VAT before reaching £90k?

Yes - voluntary registration. Common reasons: starting B2B service business (customers can reclaim), recovering input VAT on startup expenses, projecting growth past threshold soon. Drawback: extra admin + customer pricing impact. Reconsider after 6-12 months trading once revenue + margins clear.

What about VAT on online sales / Amazon FBA?

Complex for international sellers. UK sales: standard 20% VAT. EU sales via OSS (One Stop Shop) if registered. Non-UK customers: outside scope of UK VAT typically. Marketplaces (Amazon, eBay) increasingly handle VAT collection for cross-border + B2C sales. Read HMRC guidance + consider specialist e-commerce VAT advice.

Practical guide

UK VAT Registration Decision Complete Guide 2026/27

When to register for UK VAT 2026/27 - £90,000 threshold, voluntary registration decision, Flat Rate Scheme + Cash Accounting Scheme comparison, MTD compliance, deregistration.

The £90,000 threshold

UK VAT registration mandatory if:

Rolling 12-month UK taxable turnover exceeds £90,000
You expect turnover to exceed £90,000 in next 30 days
Acquisition from EU exceeds £85,000 (different threshold)

Must register within 30 days of crossing threshold. Late registration: penalties + backdated VAT.

Voluntary registration decision matrix

Scenario	Register voluntarily?
B2B service with VAT-able expenses	Yes - reclaim input VAT
B2B service with low expenses	Maybe - depends on customer profile
B2C service (e.g. hair salon)	No - lose 20% margin
Export-only sales	Yes - zero-rated supplies + input VAT reclaim
B2B product reseller	Yes if turnover approaching threshold anyway

VAT schemes for small businesses

Standard VAT (invoice basis)

Charge 20% VAT on taxable supplies
Reclaim VAT on business purchases
File quarterly VAT return
Pay net to HMRC (or claim refund)

Flat Rate Scheme

Pay flat % of gross turnover (sector-specific 8-16%)
Simpler - no input VAT tracking needed
Best for: low-expense service businesses
Worst for: high-input-VAT businesses (lose reclaim)

Cash Accounting Scheme

VAT reported on cash basis (when payment moves)
Improves cash flow
Eligibility: turnover under £1.35M
Most small business preference

Frequently asked questions

What's the UK VAT registration threshold 2026/27?
£90,000 of taxable turnover (raised from £85,000 in April 2024). Once UK turnover crosses £90,000 in any rolling 12-month period, you must register for VAT within 30 days. Deregistration threshold: £88,000 (drop below + stay below for 12 months to deregister).
Should I voluntarily register for VAT below £90k?
Depends on customer base. Voluntary registration makes sense if: customers are VAT-registered businesses (can reclaim VAT on your invoices), you have significant VAT-able expenses to reclaim, you sell to international customers (often zero-rated for VAT, but you can reclaim input VAT). Avoid voluntary registration if: customers are consumers (lose 20% margin), expenses are mostly VAT-free or low.
What is Flat Rate Scheme?
Simplified VAT for small businesses under £150k turnover. Pay flat % of gross turnover (sector-specific, typically 8-16%) instead of detailed VAT calculations. Cannot reclaim input VAT (except on capital purchases > £2,000). Useful for low-expense service businesses. First year of registration: 1% discount on standard rate.
What is Cash Accounting Scheme?
Standard VAT but reported on cash basis (when payment received/paid) rather than invoice basis. Improves cash flow - don't pay VAT until customer pays you. Eligibility: turnover under £1.35M to join, must leave when exceeds £1.6M. Most small businesses prefer this over invoice-basis VAT.
When does VAT registration hurt my business?
When customers are consumers (cannot reclaim VAT). Effectively 20% price rise to customers or 20% margin reduction to absorb VAT. Consumer-facing service businesses (hair, beauty, takeaway, etc.) often delay crossing £90k by adjusting prices/hours to stay below threshold. Some artificially split businesses (often challenged by HMRC).
What's the registration process?
Apply at gov.uk/register-for-vat. Requires: business details, Government Gateway account, anticipated turnover. HMRC issues VAT registration number within 30 days typically (sometimes longer for new businesses). From registration date: must charge VAT on taxable supplies + file quarterly VAT returns. First VAT return due ~5 weeks after first VAT quarter end.
How does Making Tax Digital affect VAT?
All VAT-registered businesses must use MTD-compatible software for VAT (since April 2022). Required: digital record-keeping, quarterly VAT returns submitted via API to HMRC, audit trail. Approved software: Xero, FreeAgent, QuickBooks, Sage, Coconut, many others. Bridging software available for spreadsheet users.
Can I register for VAT before reaching £90k?
Yes - voluntary registration. Common reasons: starting B2B service business (customers can reclaim), recovering input VAT on startup expenses, projecting growth past threshold soon. Drawback: extra admin + customer pricing impact. Reconsider after 6-12 months trading once revenue + margins clear.
What about VAT on online sales / Amazon FBA?
Complex for international sellers. UK sales: standard 20% VAT. EU sales via OSS (One Stop Shop) if registered. Non-UK customers: outside scope of UK VAT typically. Marketplaces (Amazon, eBay) increasingly handle VAT collection for cross-border + B2C sales. Read HMRC guidance + consider specialist e-commerce VAT advice.