VAT Registration for Self-Employed People: 2026/27 Guide

Updated for 2026/27. A self-employed person must normally register for VAT when taxable turnover exceeds £90,000 under the rolling 12-month test, or when they expect to exceed £90,000 in the next 30 days alone. Voluntary registration is possible below the threshold.

VAT applies to turnover, not profit

Taxable turnover is the value of VAT-taxable sales before expenses, including standard-rated, reduced-rated and zero-rated supplies. It excludes genuinely exempt supplies, wages, loans and most sales of capital assets. Zero-rated sales count toward the threshold even though VAT is charged at 0%.

Rolling 12-month test

At the end of every month, total taxable turnover for the previous 12 months. If it exceeds £90,000, notify HMRC within 30 days after the end of that month. Registration normally takes effect from the first day of the second month after the threshold was exceeded, unless an exception applies.

Future 30-day test

If at any time you expect taxable turnover in the next 30 days alone to exceed £90,000, notify HMRC by the end of that 30-day period. Registration normally takes effect from the date the expectation arose. This test is not a rolling annual forecast; it applies to a short period containing a large contract or sale.

Example: rolling test

A consultant’s taxable turnover for the 12 months to 31 August 2026 reaches £92,000. They must notify HMRC by 30 September 2026, and registration would normally begin on 1 October 2026.

Example: future test

On 10 November 2026 a contractor signs a firm agreement to provide £100,000 of taxable services during the next 30 days. They must notify HMRC by 9 December, and registration normally starts on 10 November.

Several trades and online businesses

A sole trader is one taxable person. Combine taxable turnover from consultancy, online sales, construction, content creation and other sole-trader activities. You cannot split one business artificially between names or family members to avoid registration. A genuine company or partnership is a separate person, but disaggregation rules can counter artificial separation.

Exempt and outside-the-scope income

Many insurance, finance, education, health and land supplies can be exempt where detailed conditions are met. Exempt turnover does not count toward the registration threshold and generally restricts input VAT recovery. Outside-the-scope income also needs careful classification. Do not assume “no VAT charged” means zero-rated.

Voluntary registration

Benefits can include recovering input VAT, appearing established to business customers and avoiding threshold monitoring risk. Disadvantages include charging VAT to price-sensitive consumers, administrative work, Making Tax Digital records and partial-exemption restrictions. Model the effect on prices and margins before applying.

Registration exception

If turnover exceeded £90,000 temporarily and you can show that taxable turnover in the next 12 months will not exceed the deregistration threshold—currently £88,000—you may ask HMRC for exception from registration. It is not automatic; apply with evidence and continue monitoring until HMRC decides.

What happens after registration?

• Charge the correct VAT rate from the effective date
• Issue valid VAT invoices
• Keep digital VAT records
• File returns through Making Tax Digital-compatible software
• Pay net VAT by the deadline or manage repayments
• Apply place-of-supply, reverse-charge and import/export rules where relevant

Claiming VAT on earlier costs

Subject to conditions and evidence, input VAT may be recoverable on goods bought up to four years before registration if still held or used in the business, and services bought up to six months before registration. Adjust for private use, exempt activities and assets already consumed.

VAT schemes

Eligible businesses may consider the Flat Rate Scheme, Cash Accounting Scheme or Annual Accounting Scheme. For 2026/27, Flat Rate Scheme entry generally requires expected taxable turnover excluding VAT of no more than £150,000, and Cash/Annual Accounting entry generally uses £1.35 million VAT-taxable turnover. Each scheme has exit rules and commercial trade-offs.

Flat Rate Scheme caution

The Flat Rate Scheme applies a sector percentage to VAT-inclusive turnover. A limited-cost business can use the 16.5% rate, which often removes much of the perceived simplification benefit. Most input VAT is not separately reclaimed, subject to specific capital-asset rules.

International services and goods

Place-of-supply rules can mean a sale is outside UK VAT or subject to a reverse charge. Imports can create import VAT and customs obligations. Supplies of digital services, property, construction and cross-border goods have specialised rules. Threshold treatment must be determined after classifying the supply correctly.

Deregistration

You must deregister if you cease making taxable supplies and can apply when expected taxable turnover for the next 12 months is below £88,000. Final returns can require output VAT on stock and assets held, subject to the statutory limit and exceptions.

Late registration

HMRC can backdate registration, assess VAT that should have been charged, and impose interest or penalties. The business may have to fund VAT from VAT-inclusive historic prices if customers cannot be re-invoiced. Make a voluntary disclosure promptly and calculate the correct effective date.

Registration checklist

1. Classify every supply as taxable, exempt or outside scope.
2. Calculate rolling 12-month turnover monthly.
3. Apply the future 30-day test to large contracts.
4. Compare mandatory, voluntary and exception outcomes.
5. Choose the effective date and suitable scheme.
6. Update prices, invoices, contracts and software.
7. Review pre-registration input VAT.

Use HMRC’s official VAT registration guidance and VAT rules for businesses. Our VAT threshold guide explains the tests further.

Frequently asked questions

Does salary count toward the VAT threshold?

No. Employment income is not turnover of the sole-trader VAT business.

Does zero-rated turnover count?

Yes. Zero-rated supplies are taxable supplies and count toward the threshold.

Can I wait until year-end accounts?

No. The rolling test must be monitored monthly and the future test applies whenever the expectation arises.

This guide is general information. Exemption, international and disaggregation questions require tailored VAT advice.