It is a rolling twelve months, not a tax year
A company must register once its taxable turnover exceeds £90,000 for 2026/27 in any rolling twelve-month period. Not the last accounting year, not the tax year: any twelve consecutive months.
So a company invoicing £8,000 a month is at £88,000 after eleven months and £96,000 after twelve. It crosses at the end of month twelve, whatever its year end says. This catches companies out constantly.
There is a second test. If the company expects to exceed the threshold in the next 30 days alone, it must register immediately.
The deadline, and what happens if you miss it
Register within 30 days of the end of the month in which the company went over. Registration takes effect from the first day of the second month after it crossed.
Miss it and the company still owes the VAT on sales made after its effective date, whether or not it charged VAT. That comes out of the margin, and there is a failure-to-notify penalty on top.
What changes when you cross it
If your customers are VAT-registered businesses, not much. They reclaim what you charge, and the company starts reclaiming its own input VAT, so it may end up better off.
If your customers are the public, it is a real hit. You either raise prices by the standard rate, 20% for 2026/27, or absorb it. For a company selling mainly to consumers, crossing the threshold is a 16.7% cut in revenue at the 2026/27 rate unless prices move.
Getting the rating right matters more than the registration
Registration is a form. Getting the liability right is the work, and for food, drink and construction it is complicated.
- Hot takeaway food is standard-rated.
- Cold takeaway food is mostly zero-rated.
- Anything eaten on the premises is standard-rated, whatever it is.
- In construction, the domestic reverse charge shifts who accounts for the VAT altogether.
These are the areas where getting it wrong is expensive, and getting it right is a matter of setting it up properly once.
Common questions
Q1What is the VAT threshold for 2026/27?
£90,000 of taxable turnover in any rolling twelve-month period for 2026/27. The deregistration threshold for 2026/27 is £88,000.
Q2Can I register voluntarily below it?
Yes, and it is often worth it if the company sells mainly to VAT-registered businesses, because it reclaims input VAT on its costs.
Q3What counts towards the threshold?
Taxable turnover: standard, reduced and zero-rated sales. Exempt supplies and outside-the-scope income do not count.
Q4What if I only go over once?
The company can apply for exception from registration if it can show turnover will fall back below the deregistration threshold. It has to be applied for, not assumed.
