Registering for VAT gets plenty of attention, but there are times when cancelling your registration is the right move. Whether your turnover has fallen or you are winding down, deregistering correctly avoids problems later. This guide explains when and how to deregister for VAT in 2026/27, and what happens on your final return.
When you can deregister voluntarily
You can ask to cancel your VAT registration if you can show HMRC that your VAT taxable turnover will fall below the deregistration threshold of £88,000 in the next 12 months. This is slightly below the £90,000 registration threshold, which gives a small buffer so businesses hovering around the line are not forced to register and deregister repeatedly.
When you must deregister
You must cancel your registration in certain situations, for example if you stop trading, stop making taxable supplies, sell the business, or join a VAT group. In these cases deregistration is not a choice, and you usually have to tell HMRC within 30 days of the change to avoid penalties.
How to deregister
You cancel your VAT registration through your VAT online account, giving the reason and the date you want it to take effect. HMRC normally confirms the cancellation within a few weeks and tells you the official date from which you are no longer registered. Until that date you must keep charging and accounting for VAT as normal.
Your final VAT return
After deregistration you must file one final VAT return covering the period up to the cancellation date. There is an important catch here. On that final return you may have to account for VAT on business assets and stock you still hold, if you reclaimed VAT on them when you bought them and they are worth more than a set amount. This stops businesses reclaiming VAT and then keeping the goods VAT free.
What to do after deregistering
Once deregistered, you must stop charging VAT on your sales and you can no longer reclaim VAT on your purchases. You should update your invoices and pricing, and keep your VAT records for the required period of six years in case HMRC asks to see them. If your circumstances change again and you go back over the threshold, you will need to register once more.
Frequently asked questions
When can I deregister for VAT?
You can deregister voluntarily if your VAT taxable turnover will fall below £88,000 in the next 12 months, and you must deregister if you stop trading or making taxable supplies.
What is the VAT deregistration threshold?
£88,000, slightly below the £90,000 registration threshold, which gives a buffer for businesses near the line.
Do I pay VAT when I deregister?
Possibly. On your final return you may have to account for VAT on assets and stock you still hold if you reclaimed VAT on them and they are worth more than a set amount.
How long does VAT deregistration take?
HMRC usually confirms cancellation within a few weeks, and you must keep charging VAT until the official cancellation date.
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