VAT Threshold Tracker 2025/26

UK VAT registration threshold 2025/26

The VAT registration threshold for 2025/26 is £90,000. You must register for VAT with HMRC if your taxable turnover exceeds this amount in any rolling 12-month period. This is not a calendar year — it's any 12-month period ending on the last day of any month.

How the rolling 12-month period works

At the end of every month, add up your taxable turnover for the previous 12 months. If that total exceeds £90,000 you must register for VAT within 30 days. For example, at the end of April 2025, you would add up your turnover from May 2024 to April 2025.

This catches many businesses by surprise — a good month can push you over the threshold even if your annual turnover is normally below it.

What counts as taxable turnover?

Taxable turnover includes sales of:

• Standard-rated goods and services (20%)
• Reduced-rate goods and services (5%)
• Zero-rated goods and services (0%)

It does not include exempt sales (such as financial services, insurance, education and health), income from selling business assets, or VAT itself.

What happens if you miss the threshold?

If you fail to register on time, HMRC can charge:

• A penalty of up to 15% of the VAT owed from the date you should have registered
• Back-dated VAT on all sales from the date you should have registered — even if you did not charge customers VAT
• Interest on unpaid VAT

This means you could end up paying VAT out of your own pocket on sales where you never collected it from customers.

Should you register voluntarily?

You can register for VAT voluntarily even if your turnover is below £90,000. This can be beneficial if:

• Most of your customers are VAT-registered businesses — they can reclaim the VAT you charge
• You have significant VAT on your purchases that you want to reclaim
• You want to appear more established to larger clients

However voluntary registration means more admin — quarterly VAT returns, Making Tax Digital compliance and the risk of errors. Always weigh this against the benefits.

VAT threshold history

• 2025/26: £90,000
• 2024/25: £85,000 (increased to £90,000 from 1 April 2024)
• 2017/18 to 2023/24: £85,000

What to do when you're getting close

If your turnover is approaching £90,000 you should:

• Monitor your rolling 12-month turnover every month
• Speak to an accountant about the best time to register
• Consider whether voluntary registration before you hit the threshold makes sense
• Start using Making Tax Digital compatible software
• Review your pricing — will you absorb the VAT or pass it on to customers?