Quick Summary
- The VAT registration threshold is £90,000 of taxable turnover (since 1 April 2024).
- It is a rolling 12-month test, checked at the end of every month — not your tax year or accounting year.
- You must also register if you expect to exceed £90,000 in the next 30 days alone.
- Tell HMRC within 30 days of the month you went over. Registering late can mean paying VAT you never charged.
- The deregistration threshold is £88,000. You can register voluntarily below £90,000.
"When do I need to register for VAT?" is one of the most common questions we get from growing sole traders and small companies in Glasgow. The answer depends on your taxable turnover, not your profit, and on a rolling test that catches a lot of people out. This guide explains exactly how the threshold works for 2026/27.
What is the VAT threshold for 2026/27?
The VAT registration threshold is £90,000. It rose from £85,000 on 1 April 2024 and has not changed since. The same threshold applies whether you are a sole trader, a partnership or a limited company — there is no separate "self-employed VAT threshold".
| Threshold | Amount |
|---|---|
| Registration threshold | £90,000 |
| Deregistration threshold | £88,000 |
| Flat Rate Scheme entry (expected turnover, excluding VAT) | £150,000 |
| Cash and Annual Accounting Schemes entry | £1.35 million |
The two tests: looking back and looking forward
1. The rolling 12-month (historic) test
At the end of every month, add up your taxable turnover for the previous 12 months. If the total is over £90,000, you must register. You have 30 days from the end of that month to tell HMRC, and you are registered from the first day of the second month.
Example
A Glasgow joiner's taxable turnover for the 12 months to 31 May 2026 reaches £91,200. They must notify HMRC by 30 June 2026 and will be VAT registered from 1 July 2026. Any sales from 1 July onwards must include VAT, whether or not they have charged it.
2. The 30-day (future) test
If you expect your taxable turnover in the next 30 days alone to go over £90,000 — for example because you have won a large contract — you must register by the end of that 30-day period, and registration is effective from the start of it.
What counts as taxable turnover?
Taxable turnover is the total value of everything you sell that is not exempt from VAT. That includes:
- Standard-rated sales (20%) — most goods and services
- Reduced-rated sales (5%) — for example domestic fuel
- Zero-rated sales (0%) — such as most food, children's clothing and books. These count even though no VAT is charged.
It does not include exempt income (such as most residential rent, insurance and some financial services) or sales of capital assets like selling your old van. For a sole trader, the test covers all your business activities together, not each trade separately.
The most common mistake we see is confusing turnover with profit. A taxi driver with £95,000 of fares and £60,000 of costs has a profit of £35,000 — but turnover of £95,000, which is over the threshold.
What if I go over the threshold by accident?
If you exceed £90,000 only because of a one-off spike, you can ask HMRC for an exception from registration. You need to show that your taxable turnover in the next 12 months will be below the £88,000 deregistration threshold. HMRC decides each case, so apply as soon as you notice.
What happens if I register late?
If you should have registered but didn't, HMRC will backdate your registration to the date it should have started. You then owe the VAT on every sale from that date — even though you did not charge customers VAT — usually treated as included in the price you charged. On top of that, HMRC can charge a failure-to-notify penalty based on the VAT due and why you were late, plus interest.
Telling HMRC yourself before they contact you usually leads to a much lower penalty. If you think you may already be over the threshold, speak to us straight away.
Should I register for VAT voluntarily?
You can register below £90,000. It can make sense when:
- Most of your customers are VAT-registered businesses who can reclaim the VAT you charge
- You buy a lot of standard-rated equipment or stock and want to reclaim VAT on it
- You mainly make zero-rated sales, so you would mostly receive VAT repayments
It is usually not worth it if you sell mainly to the public (for example barbers, cleaners or takeaways), because adding 20% makes you more expensive or cuts your margin. Voluntary registration also brings quarterly returns and Making Tax Digital software requirements.
VAT schemes that can help small businesses
- Flat Rate Scheme — pay a fixed percentage of your gross turnover, set by business type. Simple, but businesses that spend very little on goods ("limited cost traders") pay 16.5%, which often removes the benefit.
- Cash Accounting — pay VAT when your customer pays you, not when you invoice. Useful if customers pay late.
- Annual Accounting — one VAT return a year with interim payments.
What changes once you are registered
- Charge VAT on your taxable sales and issue VAT invoices
- Keep digital records and file returns using MTD-compatible software
- File returns (usually quarterly) — due 1 month and 7 days after each quarter ends
- Reclaim VAT on business purchases, including some costs from before registration
Our VAT returns service handles registration, scheme selection and quarterly returns for businesses across Glasgow and Clydebank.
Frequently Asked Questions
What is the VAT threshold in the UK?
The VAT registration threshold is £90,000 of taxable turnover in any rolling 12-month period. It has applied since 1 April 2024. The deregistration threshold is £88,000.
Is the VAT threshold based on turnover or profit?
Turnover. The test uses your total taxable sales before any expenses are deducted, so a business can be over the threshold even with a modest profit.
When do I have to register for VAT?
You must tell HMRC within 30 days of the end of the month in which your rolling 12-month taxable turnover went over £90,000. You also need to register if you expect to go over £90,000 in the next 30 days alone.
Is there a different VAT threshold for self-employed people?
No. Sole traders, partnerships and limited companies all use the same £90,000 threshold. For a sole trader, turnover from all your business activities is added together.
Do zero-rated sales count towards the VAT threshold?
Yes. Zero-rated sales count as taxable turnover even though no VAT is charged. Exempt sales and sales of capital assets do not count.
What happens if I register for VAT late?
HMRC backdates your registration and you owe VAT on sales from the date you should have registered, usually treated as included in what you charged. A failure-to-notify penalty and interest may also apply.
Close to the VAT Threshold?
We'll check your rolling turnover, tell you whether and when to register, and set up the right VAT scheme for your business.
Sardar Muhammad, AAT
Sardar is the founder of LimeTree Accounting Solutions, an AAT-accredited practice in Govanhill, Glasgow. He works with sole traders, tradespeople, landlords and small limited companies across Glasgow and Clydebank.
This guide is general information based on UK and Scottish tax rules as at 13 October 2026. It is not personal advice. Rates and thresholds change, so speak to us about your own situation.