Tax news · June 2026
You must register for VAT once your taxable turnover passes 90,000 pounds. Here is how the threshold works, the trap to avoid, and what to do.
For a growing business, one of the most important numbers to watch is the VAT registration threshold. Cross it and you must start charging VAT, filing VAT returns and dealing with a whole extra layer of tax. The threshold was raised to 90,000 pounds, the first increase in years, which gives small businesses a little more room before they have to register, but the rules around it still catch people out.
You must register for VAT once your taxable turnover goes over 90,000 pounds. Crucially, this is measured on a rolling 12 month basis, not your accounting year, so at the end of every month you look back at the previous 12 months. You also have to register if you expect to go over 90,000 pounds in the next 30 days alone. Once registered, you can deregister only if your turnover falls below the separate deregistration threshold of 88,000 pounds. It is the rolling nature of the test that surprises people, because a few strong months can tip you over without you noticing.
This affects any growing business approaching that level of turnover, from tradespeople and consultants to shops and online sellers. The impact is biggest for businesses that sell mainly to the public, because they often cannot simply add 20 per cent to their prices without losing customers, so the VAT comes partly out of their own margin. Businesses that sell mainly to other VAT registered businesses feel it less, because their customers can reclaim the VAT.
The first thing is to monitor your rolling turnover so registration never takes you by surprise, because late registration brings penalties and a backdated VAT bill. If you are close to the threshold, it is worth planning, which can include timing of work, considering whether the flat rate scheme would suit you, and thinking about how to present prices once you are registered. Sometimes voluntary registration before you have to is actually beneficial, especially if you buy a lot of VATable supplies, because you can reclaim the VAT on them. The right answer depends on your customers and your costs.
Our honest view is that the VAT threshold creates a real cliff edge for small businesses, where earning one extra pound of turnover can cost thousands in VAT, and some businesses deliberately hold back growth to stay under it. That is not ideal, but it is the system we have. The practical message is to watch the rolling figure closely, plan for registration before it arrives rather than after, and get advice on the best scheme and pricing, because handled well the step up is manageable, while handled badly it is a nasty shock and a penalty.
We monitor your turnover, advise on the right time and the right scheme to register, handle the registration and your VAT returns, and help you price sensibly once you are in. Book a free call back and we will keep you on the right side of the threshold.
Once your taxable turnover passes 90,000 pounds in any rolling 12 month period, or if you expect to pass it in the next 30 days. The test looks back over the previous 12 months at the end of every month, not just your accounting year.
Only by keeping taxable turnover below the threshold, which some small businesses choose to do. Once you are over, registration is compulsory, and registering late brings penalties and a backdated bill, so it is better to plan ahead.
We will watch your turnover, advise on the best scheme and handle your VAT. Book a free call back before it catches you out.