Quick answer
The UK VAT registration threshold is £90,000 of taxable turnover, in place since 1 April 2024 and unchanged for the 2026/27 tax year. The deregistration threshold (the level you have to fall below to apply to come back out) is £88,000.

That's the simple part. The harder part is what counts toward that £90,000, on what timeframe, and what happens if you cross it. Both the calculation and the trigger date have more nuance than the figure on its own suggests.
Common mistakes & confusions
  • Old guides still say £85,000. The threshold was raised in April 2024 and many articles published before that date are still indexed at the top of search results. The figure you read needs to come from a source that knows the date matters.
  • It's not measured against your tax year. The calculation runs on a 12-month rolling window that moves forward every month, which behaves very differently from an annual figure. The threshold can be crossed at any point in the year, not just at year-end.
  • Taxable turnover isn't the same as total income. Several types of income go into the calculation that businesses don't intuitively count, and several types of income stay out of it. The line between the two is exactly where most miscalculations happen.
  • Zero-rated sales count toward the threshold. Even though no VAT is charged on them, they're still taxable supplies and they push you toward the £90,000 line. This catches book sellers, children's clothing retailers, food producers, and exporters off guard regularly.
  • Multi-platform and multi-business income aggregates. Sole traders running more than one trade, sellers on multiple marketplaces, and businesses with several income streams often look at the wrong number. HMRC looks at the consolidated figure.
  • The £88,000 deregistration threshold is often misunderstood. You can't deregister just because your turnover dips below £90,000. It has to fall below £88,000, and there are conditions and timing rules around how that's tested.

The figure, in context

The UK VAT registration threshold sits at £90,000 for the 2026/27 tax year. It was raised from £85,000 on 1 April 2024 after a seven-year freeze, and has held at £90,000 since.

The seven-year freeze (2017 to 2024) created a well-documented problem: inflation quietly dragged hundreds of thousands of small businesses across the threshold without their turnover growing in real terms. The 2024 increase to £90,000 gave some breathing room, but the threshold hasn't been adjusted since, despite ongoing lobbying from business groups for further increases or inflation-linking.

For comparison, the UK threshold is one of the highest in the OECD, at the same level as Switzerland. Most European countries operate with thresholds in the £20,000 to £40,000 range, and several (Spain, Italy) have no threshold at all for resident businesses, meaning VAT registration applies from the first sale.

What "£90,000 of taxable turnover" actually means

The threshold is measured against your taxable turnover, not your total income, not your profit, not your sales invoices alone. Taxable turnover specifically includes:

It does not include:

Watch out
Exempt sales stay outside the £90,000 calculation. Zero-rated sales count toward it. The two are often confused because both result in "no VAT charged", but they have very different consequences for whether you need to register. For mixed-supply businesses, identifying which is which is exactly where the calculation goes wrong.

The 12-month rolling window

The £90,000 figure isn't an annual allowance. It's measured on a rolling 12-month basis that slides forward every calendar month. At the end of every month, the question is: "over the previous 12 months, has my taxable turnover exceeded £90,000?"

This means the threshold can be crossed at any time of the year. A business doing £8,000 of taxable sales per month would cross £90,000 partway through their 12th month, regardless of when their accounting year ends. The calendar that matters here is HMRC's, not yours.

There's also a separate "forward-look test": if at any point you have reasonable grounds to believe your taxable turnover will exceed £90,000 in the next 30 days alone, registration becomes immediately required, on a separate timeline. The two tests run in parallel, and either one can trigger compulsory registration.

Where this gets ambiguous: the rolling test produces a single moving figure, but the forward-look test depends on what "reasonable grounds to believe" means in practice. Two businesses with identical sales pipelines can read the same situation differently, and the right answer for one isn't always the right answer for the other.

The deregistration threshold (£88,000)

The deregistration threshold is the level at which you can apply to come back out of the VAT system, currently set at £88,000 (also unchanged for 2026/27). The gap of £2,000 between the two thresholds is deliberate: it prevents businesses from registering and deregistering on small fluctuations around a single line.

If you're currently VAT-registered and your taxable turnover has fallen below £88,000 and is expected to stay there, you can apply to deregister. It's not automatic, and the application can be refused if HMRC considers the projection unrealistic. There's also a specific calculation date and conditions around what triggers the right to apply, which businesses often misread.

Need a hand?

VATthreshold.UK is our dedicated service for businesses navigating the £90,000 line: assessment, registration timing, and the strategy around it.

Why the threshold matters even if you're well below it

Most small businesses think of the threshold as a future problem: "I'll deal with it when I get close". That works until it doesn't. There are several reasons to know your number well before you're approaching £90,000:

Will the threshold change?

At the time of writing (mid-2026), no further increase has been announced for the rest of the 2026/27 tax year. The government's position has been that the current level remains appropriate, despite continued lobbying from business groups and FSB for a higher threshold or inflation-linking.

Future changes are typically announced at Budget or Spring Statement events. If you're operating near the threshold, it's worth keeping an eye on those announcements, but it's also worth not assuming a change is coming that hasn't been confirmed.

The situations that most often turn into costly mistakes

The threshold figure is simple. What it triggers, when, and on which basis is where things tend to go wrong. In practice, the situations below are where businesses most often end up paying backdated VAT, penalties, or both:

Whether you're a business owner or an accountant working on a client case, we focus on the VAT questions where extra expertise pays off, and we work in plain English.

General information, not personal advice. UK VAT rules are detailed and the right answer for your business depends on your specific circumstances. For decisions with real financial impact, get them checked by a specialist.