---
title: What is the VAT threshold in the UK for 2026/27?
description: "For practitioners advising UK businesses in the 2026/27 tax year, tracking a client's turnover against statutory limits remains a fundamental compliance task. The government has frozen the headline Value Added Tax (VAT) parameters for the current financial year. For 2026/27,…"
url: "https://www.accountingfirms.co.uk/knowledge-bank/what-is-the-vat-threshold-in-the-uk/"
updated: "2026-08-11"
category: Limited Company
---

# What is the VAT threshold in the UK for 2026/27?

For practitioners advising UK businesses in the 2026/27 tax year, tracking a client's turnover against statutory limits remains a fundamental compliance task. The government has frozen the headline Value Added Tax (VAT) parameters for the current financial year.

For 2026/27, the UK VAT registration threshold is £90,000.  The VAT deregistration threshold is £88,000.

Understanding exactly **what is the VAT threshold in the UK** requires looking beyond the £90,000 headline figure. You must properly classify the client's income to determine their taxable turnover and apply two distinct statutory timing tests under the Value Added Tax Act 1994 (VATA 1994).

## Defining Taxable Turnover

Before testing the client's revenue against the £90,000 limit, you must calculate their "taxable turnover". Section 4 of VATA 1994 dictates what income you must include:

> (1) [VAT shall be charged](https://www.accountingfirms.co.uk/blog/is-personal-independence-payment-pip-taxable/) on any supply of goods or services made in the United Kingdom, where it is a taxable supply made by a taxable person in the course or furtherance of any business carried on by him. (2) A taxable supply is a supply of goods or services made in the United Kingdom other than an exempt supply."

Therefore, taxable turnover includes all standard-rated, reduced-rated, and zero-rated supplies.  You must strictly exclude any exempt income (such as certain financial services or property transactions) and the proceeds from selling [capital assets](https://www.accountingfirms.co.uk/blog/capital-gains-tax/) when assessing the threshold.

## The Two Mandatory Registration Tests

Under Schedule 1 to VATA 1994, a person who makes taxable supplies becomes liable to [register for VAT](https://www.accountingfirms.co.uk/blog/vat-the-deregistration-trap/) if they breach either of two strict statutory tests.  You must monitor clients continuously against both tests, as they operate on different timelines.

### 1. The 12-Month Rolling Test (Backwards Look)

A business becomes liable to register at the end of any month if its total taxable turnover in the preceding 12-month period exceeded £90,000.

Under paragraph 1(1)(a) of Schedule 1 to VATA 1994, the liability triggers on the final day of the month the threshold was breached.  *Example:* If a client's rolling 12-month taxable turnover hits £92,000 on 15 August 2026, they become liable to register at the end of August.

### 2. The 30-Day Forward Look Test

A business becomes liable to register at any time if there are reasonable grounds for believing that the value of its taxable supplies in the upcoming 30-day period *alone* will exceed £90,000.

Unlike the 12-month test, the 30-day test triggers immediately on the day the expectation arises, not at the end of the month.  *Example:* If a client signs a single, large commercial contract on 10 May 2026 worth £100,000, to be delivered and invoiced by 30 May 2026, they become liable to register on 10 May.

## Notification Deadlines and Penalties

When a business breaches either threshold test, they bear a strict statutory duty to [notify HMRC](https://www.accountingfirms.co.uk/knowledge-bank/how-do-i-notify-hmrc-of-a-change-in-my-circumstances/).

Under paragraph 5(1) of Schedule 1 to VATA 1994, a person who becomes liable to register via the 12-month rolling test must notify HMRC within 30 days of the end of the relevant month.

> "A person who becomes liable to be registered by virtue of paragraph 1(1)(a) above shall notify the Commissioners of the liability within 30 days of the end of the relevant month."

If a client fails to notify HMRC within this 30-day statutory window, HMRC will backdate the effective date of registration, issue retrospective assessments for the output tax the client should have charged, and can impose a failure to notify penalty.

## Exceptions and Deregistration

Clients hovering around the margins of the threshold have specific statutory options.

**Exception from Registration (Temporary Spikes):** If a client breaches the 12-month rolling test due to a one-off, temporary spike in revenue, HMRC may grant an "exception from registration".  To secure this exception, you must provide documentary evidence proving that the business's taxable turnover in the subsequent 12 months will not exceed the £88,000 deregistration threshold.  Importantly, this exception is only available for breaches of the 12-month test; you cannot claim it if the client breaches the 30-day forward look test.

**Voluntary Registration:** A business trading below the £90,000 threshold does not have to wait until it breaches the limit. Under paragraph 9 of Schedule 1 to VATA 1994, a person can register voluntarily at any time, provided they satisfy HMRC that they make, or intend to make, taxable supplies in the course of their business.

**Deregistration:** If a registered client's taxable turnover falls below £88,000, and you can demonstrate it will stay below that level for the next 12 months, the client can apply to voluntarily cancel their [VAT registration](https://www.accountingfirms.co.uk/blog/disincorporation-some-practicalities/).

## Summary Table: VAT Registration Thresholds 2026/27

| Element / Test | 2026/27 Limit | Consequence or Rule |
| --- | --- | --- |
| **Registration Threshold** | **£90,000** | Must register if taxable turnover breaches this limit. |
| **Deregistration Threshold** | **£88,000** | May apply to cancel registration if turnover falls below this. |
| **Taxable Turnover** | **N/A** | Includes standard, reduced, and zero-rated supplies; excludes exempt supplies. |
| **12-Month Rolling Test** | **£90,000** | Liability triggers at the end of the month the preceding 12-month turnover exceeds the threshold. |
| **30-Day Forward Look Test** | **£90,000** | Liability triggers instantly if the next 30 days alone will exceed the threshold. |
| **Notification Deadline** | **30 Days** | Must notify HMRC within 30 days of the end of the relevant month (for the 12-month test) to [avoid penalties](https://www.accountingfirms.co.uk/blog/when-is-corporation-tax-due/). |
| **Exception from Registration** | **Temporary Spikes** | HMRC may waive registration if future 12-month turnover will definitely stay below £88,000 (12-month test only). |
| **Voluntary Registration** | **< £90,000** | Can register at any time if making taxable supplies. |

*For completeness, if a client has breached the registration threshold but failed to notify HMRC in time, immediately calculate the prospective late notification penalties and prepare the retrospective output tax calculations before submitting the delayed application to HMRC.*