UK VAT Registration Decision Guide 2026/27
UK VAT registration 2026/27: the £90,000 threshold, voluntary registration pros and cons, Flat Rate and Cash Accounting schemes, and deregistration.
When to register for UK VAT in 2026/27: the £90,000 threshold, the voluntary registration decision, the Flat Rate and Cash Accounting schemes, Making Tax Digital and deregistration. Figures are from GOV.UK.
The £90,000 threshold
You must register for VAT if:
- your VAT taxable turnover for the last 12 months goes over £90,000, or
- you expect it to go over £90,000 in the next 30 days alone.
In the first case, register within 30 days of the end of the month you went over; your effective date of registration is the first day of the second month after. If you register late you must pay VAT on sales made since the date you should have registered, and you might have to pay a penalty.
Voluntary registration
| Situation | Usual effect of registering |
|---|---|
| Business customers, VAT on your costs | Often worth it: customers reclaim your VAT, you reclaim yours |
| Business customers, few costs | Neutral for customers; mainly extra admin for you |
| Consumer customers | Usually costly: 20% on prices or off your margin |
| Mainly zero-rated sales | Often worth it: you can reclaim VAT on costs |
VAT schemes for small businesses
Standard accounting
- Charge VAT on taxable sales (20% standard rate)
- Reclaim VAT on business purchases
- Pay the difference to HMRC, or claim a repayment
Flat Rate Scheme
- Pay a fixed percentage of VAT-inclusive turnover, set by business type (16.5% for limited cost businesses)
- No reclaim on purchases except capital assets over £2,000
- Join if turnover is expected to be £150,000 or less excluding VAT
Cash Accounting Scheme
- Account for VAT when money is received or paid
- Join at £1.35 million or less; leave above £1.6 million
- Not combined with the Flat Rate Scheme
Related pages
Frequently asked questions
What is the UK VAT registration threshold for 2026/27?
£90,000 of VAT taxable turnover. You must register if your taxable turnover for the last 12 months goes over £90,000, within 30 days of the end of the month you went over, or if you expect to go over £90,000 in the next 30 days alone. You can ask to cancel your registration if taxable turnover falls below £88,000 (GOV.UK Register for VAT).
Should I voluntarily register for VAT below the threshold?
It depends mainly on your customers. Registration usually suits you if your customers are VAT-registered businesses (they can reclaim the VAT you charge) or you have significant VAT on your costs to reclaim. It usually costs you if your customers are consumers who cannot reclaim VAT, because you either raise prices by the VAT or absorb it. Registration also brings VAT returns and digital record-keeping.
What is the Flat Rate Scheme?
You pay HMRC a fixed percentage of your VAT-inclusive turnover, set by your business type, instead of working out VAT on each sale and purchase. You cannot reclaim VAT on purchases except certain capital assets over £2,000. You can join if you expect VAT taxable turnover of £150,000 or less (excluding VAT) in the next 12 months, and you get a 1% discount in your first year of VAT registration. "Limited cost businesses" pay 16.5% (GOV.UK).
What is the Cash Accounting Scheme?
You account for VAT when your customer pays you and reclaim it when you pay your suppliers, rather than by invoice date, which helps cash flow if customers pay late. You can join if your estimated VAT taxable turnover is £1.35 million or less in the next 12 months, and you must leave if it goes over £1.6 million. It cannot be used together with the Flat Rate Scheme, which has its own cash-based turnover method (GOV.UK).
When does VAT registration hurt my business?
When most customers are consumers or others who cannot reclaim VAT. Adding 20% standard-rate VAT either raises their price or comes out of your margin. Keeping turnover below the threshold is legitimate, but splitting one business into several to stay under it can be challenged by HMRC.
What is the registration process?
Most businesses register online at gov.uk/register-for-vat. HMRC then sends you by post your 9-digit VAT registration number, when your first return and payment are due, and your effective date of registration. You cannot show VAT on invoices until you have your number, but you can raise prices to account for it and reissue invoices later. Returns and payments are usually due 1 month and 7 days after the end of each accounting period.
How does Making Tax Digital affect VAT?
All VAT-registered businesses should now be signed up for Making Tax Digital for VAT; HMRC signs up new registrations automatically unless the business is exempt or has applied for an exemption. You keep digital records and submit returns through compatible software.
What about Northern Ireland businesses buying from the EU?
A Northern Ireland business that only sells VAT-exempt or out-of-scope goods and services must register if it buys goods for more than £90,000 in any 12 months from EU VAT-registered suppliers to use in the business (GOV.UK Register for VAT).