Do I need to register for VAT?

The VAT registration threshold is currently £90,000 (2026/27).

If your VAT taxable turnover exceeds this threshold, you will normally be required to register for VAT and charge VAT on your taxable supplies.

There are two registration tests that you need to be aware of:

The historic method (looking back): At the end of each month, you should look back at your VAT taxable turnover for the previous 12 months. If the total value of your taxable sales (including sales charged at 20%, 5% or 0%) exceeds the VAT registration threshold, you must notify HMRC within 30 days.

The future method (looking forward): If you expect your VAT taxable turnover to exceed £90,000 in the next 30 days alone, you must register for VAT immediately. This situation is less common but can occur where a business secures a significant new contract or expects a large increase in sales within a short period.

You should monitor your taxable turnover regularly and consider both the historic and future registration tests. Most registrations will be due to meeting the historic test, but a sudden increase in expected sales can trigger an earlier requirement to register under the future test. When considering the tests, remember that taxable turnover includes standard-rated, reduced-rated and zero-rated sales, but generally excludes exempt supplies.

Most businesses register for VAT online through HMRC.

You can complete the registration yourself or ask an accountant or tax adviser to register your business on your behalf.

Before registering, it is helpful to have details of:

• your business structure
• your business activities
• your expected taxable turnover
• your bank account details.

Most VAT-registered businesses are required to keep digital VAT records and submit VAT Returns using MTD-compatible software. Therefore, as part of the registration process, you should also ensure that you have suitable software.

HMRC provides guidance on VAT registration and any situations where an alternative registration process may be required.

Voluntary registration is where a business chooses to register for VAT before it is required to do so.

A business making taxable supplies (sales that would charged VAT at 20%, 5% or 0%) can usually register for VAT even if its taxable turnover is below the registration threshold.

You may choose to register voluntarily for a number of reasons:

• To reclaim VAT on start-up costs, purchases and expenses – this can be particularly beneficial if your business has significant upfront costs.
• To reclaim VAT while making zero-rated supplies – if your business mainly sells zero-rated goods you may be able to recover VAT on purchases without charging VAT on many of your sales.
• To enhance business credibility – some customers and suppliers may consider your business to be established and operating at a certain scale if it is VAT registered.
• Because their customers are VAT registered – if most of your customers can recover VAT themselves, charging VAT may have less impact on your pricing.
• To use a VAT accounting scheme – you may choose to register in order to access schemes such as the Flat Rate Scheme, although the benefits will depend on the circumstances of your business.

Before registering voluntarily, it is important to remember that VAT registration also brings additional responsibilities, including charging VAT where applicable, keeping VAT records and complying with Making Tax Digital (MTD) requirements.

Once registered for VAT, you can usually reclaim the VAT your business is charged on goods and services it purchased for use in the business. This is known as input VAT.

However, VAT cannot normally be reclaimed on:

• purchases made for private use
• costs relating to exempt supplies
• certain items that are specifically blocked from VAT recovery.

To support a VAT claim, you will normally need a valid VAT invoice or other acceptable VAT evidence showing the VAT charged.

Most businesses record and track recoverable VAT using MTD-compatible accounting software, with the relevant amounts included on their VAT Returns.

More detailed guidance on reclaiming VAT, including the records required to support a claim, is in our How can I reclaim VAT guide.

A business may be able to deregister for VAT if its taxable turnover falls below the deregistration threshold, which is currently £88,000 (2026/27).

If you believe your taxable turnover will remain below the threshold, you can apply to HMRC to cancel your VAT registration.

Many businesses apply online through HMRC, although an accountant or tax adviser can also help with the process.

Once HMRC confirms the cancellation of your VAT registration:

• you must stop charging VAT from the effective date of deregistration
• you must stop submitting VAT Returns for future periods (unless requested by HMRC)
• you must continue to retain your VAT records for the required period, normally six years.

Before deregistering, it is worth considering the impact on your business, particularly if you currently reclaim significant amounts of VAT on purchases and expenses.