UK VAT registration threshold 2026: When to register and how

The current VAT threshold

The UK VAT registration threshold for 2026 is £90,000. This means that if your taxable turnover exceeds £90,000 in any rolling 12-month period, you are legally required to register for VAT. The threshold has been frozen at this level since April 2024.

The deregistration threshold is £88,000. If your taxable turnover falls below this amount, you can apply to deregister, though you are not required to.

When is VAT registration mandatory?

You must register for VAT if either of these conditions applies:

The backward look is a rolling calculation. At the end of every month, add up your taxable turnover for the previous 12 months. If the total exceeds £90,000, you must register. You cannot wait until your financial year end to check.

The forward look applies when you land a single large contract or have reason to believe you will breach the threshold imminently.

What counts as taxable turnover?

Taxable turnover includes the total value of everything you sell that is not exempt from VAT. This includes zero-rated supplies (which are taxable but at 0%). It does not include VAT-exempt supplies such as insurance, finance, or education services, and it does not include income from outside the UK in most cases.

Common items that count toward the threshold:

• Sales of goods and services within the UK
• Zero-rated exports (these are taxable, just at 0%)
• Goods or services you barter or exchange

Items that do not count:

• VAT-exempt sales
• Sales of capital assets (in most cases)
• Income from employment or dividends

Voluntary registration

You can register for VAT voluntarily even if your turnover is below £90,000. There are practical reasons to consider this:

• Reclaim input VAT: If you buy goods or services with VAT charged, you can reclaim that VAT. This is particularly valuable for businesses with significant upfront costs or capital expenditure.
• Credibility: Some larger clients and government bodies prefer or require their suppliers to be VAT-registered.
• Flat Rate Scheme eligibility: Small businesses can join the Flat Rate Scheme, which simplifies VAT accounting. Depending on your sector, this can result in keeping a portion of the VAT you charge.

The downside is administrative burden. You must file VAT returns (usually quarterly), charge VAT on your invoices, and maintain proper records. If your clients are consumers rather than businesses, adding 20% VAT to your prices may make you less competitive.

Making Tax Digital for VAT

All VAT-registered businesses in the UK must comply with Making Tax Digital (MTD) requirements. This means:

• Digital record-keeping: You must keep your VAT records digitally using compatible software. Spreadsheets alone are no longer acceptable unless they feed into an MTD-compatible bridging product.
• Digital submission: VAT returns must be submitted through MTD-compatible software, not through the HMRC online portal.
• Digital links: Data must flow digitally between your records and your VAT return. Manual re-typing of figures is not permitted.

Compatible software includes Xero, QuickBooks, FreeAgent, Sage, and others. Incorra integrates with these accounting tools and helps you track your VAT position in real time.

How to register

VAT registration is done through HMRC, not Companies House. You can register online through your Government Gateway account. The process requires:

• Your company details (company number, registered address)
• Your bank account details for VAT refunds
• An estimate of your expected taxable turnover for the next 12 months
• Your effective date of registration

HMRC typically processes online applications within a few weeks and sends your VAT registration certificate with your VAT number by post.

VAT return deadlines

Once registered, you must file VAT returns and pay any VAT due. The standard filing frequency is quarterly, with the return and payment due one month and seven days after the end of each quarter. For example, a quarter ending 31 March has a filing and payment deadline of 7 May.

Late filing triggers a points-based penalty system introduced in January 2023. Each late submission earns a penalty point, and once you reach the threshold for your filing frequency (4 points for quarterly filers), you receive a £200 penalty for each subsequent late return.

How Incorra helps

Incorra tracks your revenue against the VAT threshold automatically. If you are approaching £90,000 in taxable turnover, the dashboard alerts you before you breach the threshold, giving you time to register proactively rather than scrambling to comply after the fact. Incorra also tracks your VAT return deadlines and integrates with your accounting software to keep your records in sync.

[Start using Incorra](https://incorra.com/auth/register) to stay ahead of your VAT obligations.