The UK VAT registration threshold is £90,000 for 2025/26. If your taxable turnover exceeds £90,000 in any rolling 12-month period, you must register for VAT. You must also register if you expect your turnover to exceed £90,000 in the next 30 days alone.
The threshold increased from £85,000 to £90,000 in April 2024. This is the first increase since 2017, when it rose from £83,000.
Once registered, you charge VAT at 20% (standard rate) on most goods and services, submit VAT returns (usually quarterly), and can reclaim VAT on business purchases. The deregistration threshold is £88,000 — if your turnover drops below this, you can apply to deregister.
Should you register voluntarily before hitting the threshold? There are pros and cons.
The advantages of voluntary registration include being able to reclaim VAT on purchases and expenses, appearing more professional to larger clients who expect VAT invoices, and avoiding the sudden price increase when you hit the threshold.
The disadvantages include the administrative burden of VAT returns, potentially making your prices 20% higher than non-VAT-registered competitors, and the cost of accounting software or an accountant for VAT compliance.
For many service-based businesses selling to consumers, staying below the threshold can be advantageous. For businesses selling to other VAT-registered businesses, the impact is neutral because they reclaim the VAT anyway.
The Flat Rate Scheme simplifies VAT for small businesses. Instead of tracking VAT on every purchase, you pay a fixed percentage of your gross turnover. The percentage depends on your industry — for example, IT consultants pay 14.5%.
Use our VAT calculator to add or remove VAT at any rate.