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The UK VAT registration threshold is £90,000 for 2025/26. You must register if your taxable turnover passes £90,000 over any rolling 12 month period, or if you expect to pass it in the next 30 days on its own. The deregistration threshold is £88,000. Register late and HMRC can charge a penalty based on the VAT you should have paid, on top of the VAT itself.
That covers most of what people land here to find. The detail below is where it gets useful, because the threshold is not an annual figure, late registration costs less than most people fear if you act early, and registering itself is free.
What is the VAT registration threshold for 2025/26?
The threshold has sat at £90,000 since 1 April 2024, and it still applies for the 2025/26 tax year. Before that it was £85,000 for seven years, so plenty of older guides online still quote the wrong number. Check the date on anything you read.
Here are the figures that matter:
| Test | Threshold 2025/26 | What it means |
|---|---|---|
| Registration (backward look) | £90,000 | Taxable turnover over the past 12 months |
| Registration (forward look) | £90,000 | Turnover you expect in the next 30 days alone |
| Deregistration | £88,000 | Apply to cancel if turnover drops below this |
Taxable turnover means your total sales that are not exempt from VAT. That includes standard rated, reduced rated and zero rated sales. It does not include VAT exempt income, sales outside the scope of UK VAT, or the sale of capital assets like equipment or vehicles you used in the business. Getting this definition wrong is the single most common reason businesses register a month or two later than they should.
- the rolling 12 month test
How the threshold actually works
This is where people trip up. The £90,000 figure is not measured against your accounting year or the tax year. It rolls.
At the end of every month, you look back at your taxable turnover for the previous 12 months. If that running total has gone over £90,000, the clock starts. A seasonal business can cross the line in, say, August on the strength of a busy summer, then drop back under by November. Crossing it once is enough. You do not get to wait and see whether it averages out.
The backward look
If your taxable turnover over the last 12 months goes above £90,000, you must tell HMRC within 30 days of the end of the month you went over. Your effective date of registration is the first day of the second month after you crossed the threshold.
A worked example. Your rolling turnover passes £90,000 on 18 September. The month ends on 30 September. You have until 30 October to notify HMRC, and you must charge VAT from 1 November.
The forward look
There is a second trigger people forget. If you expect your taxable turnover to go over £90,000 in the next 30 days on its own, you must register by the end of that 30 day period, and you charge VAT from the date you realised. This catches one off events. Win a single £100,000 contract that will be delivered inside a month and you are over the threshold the day you sign, even if your trailing 12 months is tiny.
When do you have to register, and by when?
| Your situation | Deadline to tell HMRC | You charge VAT from |
|---|---|---|
| Rolling 12 month turnover exceeds £90,000 | Within 30 days of the end of that month | First day of the second month after you exceeded it |
| You expect to exceed £90,000 in the next 30 days alone | By the end of that 30 day period | The date you became aware |
| You register voluntarily (below £90,000) | When you choose | Your chosen date, or the date HMRC processes it |
Miss the deadline on either of the first two and you have registered late. That is a specific thing in HMRC’s eyes, and it carries a penalty regime of its own, which is the section below.
How much does it cost to register for VAT?
Nothing, if you do it yourself. Registering for VAT through your Government Gateway account on gov.uk is free. HMRC does not charge a registration fee, despite what a few of the search results for “VAT registration cost” might suggest.
The only cost is your time, or an accountant’s fee if you ask someone to handle it for you. That fee buys you two things worth having: the registration done correctly the first time, and the right scheme chosen from the start. The flat rate scheme, cash accounting and standard VAT accounting all suit different businesses, and switching later is more hassle than choosing well at the outset. We cover the options in our guide to VAT schemes.
Penalties for late VAT registration
This is the part that worries people, and it is also the part where the panic is usually overdone. Register a bit late, own up before HMRC comes knocking, and the penalty can be zero.
Late registration falls under the Failure to Notify rules in Schedule 41 of the Finance Act 2008. The penalty is a percentage of the potential lost revenue, which is the VAT you should have charged and paid over while you were unregistered. You owe that VAT regardless. The penalty sits on top.
Three things set the percentage: whether the failure was non deliberate, deliberate, or deliberate and concealed; whether you came forward yourself (unprompted) or only after HMRC made contact (prompted); and how quickly you disclosed.
| Behaviour | Unprompted disclosure | Prompted disclosure |
|---|---|---|
| Non deliberate | 0% to 30% | 10% to 30% |
| Deliberate, not concealed | 20% to 70% | 35% to 70% |
| Deliberate and concealed | 30% to 100% | 50% to 100% |
For most late registrations, which are honest oversights rather than anything sinister, you are in the top row. And there is a rule worth knowing inside that row. If your failure was non deliberate and you tell HMRC within 12 months of the date the VAT became due, an unprompted disclosure can reduce the penalty to nothing. Leave it longer than 12 months and the floor rises to 10% for an unprompted disclosure.
You can also avoid a penalty entirely if you had a reasonable excuse for registering late, as long as you put things right once the excuse no longer applied. A serious illness or a genuine, unforeseeable event can qualify. Not having the money to pay does not.
One more cost to factor in. HMRC charges interest on the late paid VAT from the date it was originally due, separately from any penalty. So the real arithmetic of late registration is: the back VAT, plus interest, plus a penalty that depends entirely on how you handle the disclosure.
The practical takeaway from the cases we see: the moment you realise you have crossed the threshold and missed the deadline, get the disclosure in. Voluntarily, in writing, with the figures. That single decision usually moves you from a 10% to 30% penalty down toward zero.
What happens after you register
Once you are registered, the work shifts from “should I register” to “how do I stay compliant”. Three things start to apply:
You keep digital records and file your returns through compatible software under Making Tax Digital. Our Making Tax Digital for VAT guide walks through the software and the deadlines.
You pick a VAT scheme that fits your cash flow and admin capacity. See VAT schemes explained.
You file and pay on time, because the late filing and late payment penalties are a separate regime from the one above, with their own points and charges.
If you would rather not think about any of it, our VAT returns service handles registration, scheme selection and quarterly filing.
Should you register voluntarily below £90,000?
You can register before you hit the threshold, and a lot of businesses do. Whether you should depends on who your customers are.
It helps if you sell mainly to other VAT registered businesses. They reclaim the VAT you charge, so your prices stay competitive, and you get to reclaim VAT on your own costs. Registration can also make a young business look more established to corporate clients who expect to see a VAT number.
It hurts if you sell to the public or to small businesses that cannot reclaim VAT. Adding 20% to your prices makes you 20% more expensive overnight, and you take on the admin of returns for no obvious gain.
We will not pretend voluntary registration is right for everyone. It is oversold. For a service business selling to consumers, it often makes you worse off. For a B2B supplier with VAT heavy costs, it can pay for itself. If you are weighing it up, talk to us before you commit, because deregistering later is more painful than waiting.
VAT deregistration threshold
If your taxable turnover falls below £88,000, you can ask HMRC to cancel your registration. It is not automatic. You apply, and you keep charging and filing until HMRC confirms the cancellation date. There are timing traps and a possible clawback on assets you still hold, so we have set those out separately in our UK VAT deregistration guide.
How IBISS & CO can help
We register businesses for VAT, fix late registrations before they become expensive, and handle the disclosure to HMRC so you get the best penalty position available. We also take on the quarterly filing afterwards so it stops being your problem.
If you think you have crossed the threshold, or you already know you registered late, the sooner we look at it the cheaper it tends to be. Book a consultation or review our UK VAT Services or visit the office.
We work with start ups and growing SMEs across the UK, and from our offices in London and Dubai.
VAT registration threshold FAQs
When do I need to register for VAT?
When your taxable turnover passes £90,000 over any rolling 12 month period, or when you expect to pass £90,000 in the next 30 days on its own. The 12 month figure is not your accounting year. You check it at the end of every month.
What is the VAT threshold for 2025?
£90,000 for the 2025/26 tax year. It has been £90,000 since 1 April 2024. The deregistration threshold is £88,000.
What is the penalty for registering for VAT late?
A percentage of the VAT you should have paid while unregistered, between 0% and 30% for an honest oversight, depending on how and when you disclose. You also owe the back VAT and interest. Coming forward before HMRC contacts you, within 12 months, can reduce the penalty to nothing.
Is it free to register for VAT?
Yes. Registering through gov.uk is free. HMRC charges no registration fee. You only pay if you ask an accountant to do it for you.
Do I count exempt sales toward the threshold?
The threshold is based on taxable turnover, which is your standard, reduced and zero rated sales. VAT exempt income and out of scope sales do not count, and neither do sales of capital assets.
How long does VAT registration take?
HMRC usually issues a VAT number within about 30 working days, sometimes longer if it needs to verify your details. You should start preparing to charge VAT from your effective date even if the number has not arrived yet.
Sunil Yaqoob
Practice Manager at IBISS & CO. He advises SMEs on VAT, Corporation Tax, and payroll compliance, with over 10 years in public practice.
This guide is general information, not advice for your specific situation. VAT thresholds and penalty rates can change at fiscal events, so check the date above. For advice on your own registration, speak to a qualified adviser.
