Question 1

What is the VAT registration threshold for 2025/26?

Accepted Answer

The VAT registration threshold for 2025/26 is £90,000. It increased from £85,000 to £90,000 in April 2024 and has remained at £90,000 for 2025/26. If your taxable turnover in any rolling 12-month period exceeds £90,000, you must register for VAT.

Question 2

What are the two VAT registration tests?

Accepted Answer

HMRC applies two tests. The 'historic test' (backward-looking): if your taxable turnover in the last 12 months exceeds £90,000, you must notify HMRC within 30 days and register. The 'future test' (forward-looking): if you reasonably expect your turnover in the next 30 days alone to exceed £90,000, you must register immediately from the start of that 30-day period.

Question 3

What is the VAT deregistration threshold?

Accepted Answer

The deregistration threshold for 2025/26 is £88,000. If you are already VAT-registered and your taxable turnover falls below £88,000, you can apply to deregister. Note: you can choose to remain registered even if you fall below this level.

Question 4

What is the VAT Flat Rate Scheme and who does it suit?

Accepted Answer

The Flat Rate Scheme (FRS) lets you pay a fixed percentage of your VAT-inclusive turnover to HMRC instead of tracking every penny of input and output VAT. The rate varies by trade — for example, 14.5% for accountancy, 9.5% for retailing. It suits businesses with low VAT-able expenses (consultants, freelancers, agencies). If you buy lots of goods or materials, the Standard Scheme usually wins because you reclaim all input VAT.

Question 5

Can I register for VAT voluntarily?

Accepted Answer

Yes. If your turnover is below £90,000 you can still register voluntarily. This makes sense if your customers are VAT-registered businesses (they can reclaim the VAT you charge them) or if you have significant VAT-able purchases you want to reclaim. The downside is admin and potentially making yourself look more expensive to non-VAT-registered customers.

Question 6

What happens if I register for VAT late?

Accepted Answer

HMRC can charge a penalty for late registration (currently a percentage-based penalty depending on how long you were late). You also owe VAT on all sales from the date you should have registered — even if you didn't charge it to customers. Register as soon as you realise you've exceeded the threshold to minimise penalties.

VAT Registration Threshold Calculator 2025/26

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