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VAT

VAT Registration: The Threshold and What Changes When You Cross It

5 min read · Reviewed 9 Aug 2026

VAT registration becomes compulsory once a business's taxable turnover passes a set threshold, currently £90,000. This guide explains what that threshold is and what changes once a business registers, without suggesting when a business should register.

The current threshold

A business must register for VAT once its taxable turnover for the previous 12 months goes over £90,000, or if it expects to go over that figure in the next 30 days alone.

A business can also register voluntarily before reaching the threshold. Once registered, a business can apply to deregister if its taxable turnover falls below £88,000.

Current VAT thresholds
ThresholdAmount
Registration threshold£90,000
Deregistration threshold£88,000
This guide explains what the threshold is and what happens once a business crosses it. It does not suggest whether a business should register before it has to.

What changes when you register

Once registered, a business must charge VAT on its taxable sales at the appropriate rate, and pay that VAT to HMRC, usually every quarter.

  • Charging VAT: VAT-registered businesses add VAT to the price of most goods and services they sell, at the standard, reduced or zero rate depending on what is being sold.
  • Reclaiming VAT: a VAT-registered business can usually reclaim the VAT it has paid on its own business purchases and expenses.
  • VAT returns: a VAT return is submitted, usually quarterly, showing VAT charged on sales and VAT reclaimed on purchases, with the difference paid to or refunded by HMRC.
  • Record keeping: VAT-registered businesses must keep VAT records and, for most businesses, submit VAT returns using Making Tax Digital-compatible software.

Prices charged to customers may need to change once VAT applies, since VAT is either added to the price or, if a price is meant to stay the same to the customer, absorbed into it.

Deregistering

A registered business can apply to deregister once its taxable turnover falls below the deregistration threshold, currently £88,000, or if it stops trading or making taxable supplies.

Once deregistered, a business stops charging VAT and can no longer reclaim VAT on its purchases, and must account for VAT on the value of certain business assets it still holds.

Official sources

GOV.UK sources used in this guide

Key takeaways

  • VAT registration is compulsory once taxable turnover passes £90,000 over 12 months, or is expected to in the next 30 days.
  • Once registered, a business charges VAT on its taxable sales and can reclaim VAT on its own purchases.
  • VAT returns are usually submitted quarterly, showing VAT charged and VAT reclaimed.
  • A business can apply to deregister once turnover falls below £88,000.
  • This guide explains what happens at the threshold, not whether a business should register early or late.

Frequently asked questions

Do I have to register as soon as I reach the threshold?
Registration is required once taxable turnover for the past 12 months passes £90,000, or is expected to pass it in the next 30 days alone. There is a set time limit for notifying HMRC once that happens.
Can I register for VAT before I reach the threshold?
Yes, voluntary registration is possible before turnover reaches the threshold. This guide explains what changes on registering, not whether voluntary registration suits a particular business.
Does the threshold apply to profit or turnover?
It applies to taxable turnover, the total value of taxable sales, not profit.

Last reviewed

Reviewed
Version 1.0.0

This guide explains the current VAT registration threshold and what changes once a business registers. It is not personal tax advice. The threshold and deregistration figures are reviewed periodically; check the current figures for your situation.