The two testsYou must register for VAT if either applies.The backward-looking test. Your VAT-taxable turnover over any rolling twelve months goes over £90,000. This is the one people get caught by, because the twelve months are not your tax year or your accounting year. They are the last twelve months, recalculated every month. A strong autumn followed by a strong spring can push you over in June even though neither year on its own looks close.The forward-looking test. You expect your turnover to go over £90,000 in the next 30 days alone. One large contract can trigger this by itself, and it applies from the moment you realise, not when the money arrives.The deregistration threshold is £88,000. Both figures are unchanged for 2026/27.Deadlines, and why they matterThe two tests have different deadlines, and applying the wrong one is how people register late.Backward-looking test. Register within 30 days of the end of the month you went over. Your registration takes effect from the first day of the second month after you crossed.Forward-looking test. Register before the end of that 30-day period, and registration takes effect from the date you realised you would go over, not the first of any month, and not the date the money actually arrives. If your registration is effective from 1 October and you carry on invoicing without VAT until December, you still owe HMRC the VAT on everything you invoiced from 1 October, whether or not you charged it. On £20,000 of VAT-inclusive standard-rate sales, the VAT element is £3,333, which you may have to fund if you did not charge it, plus a possible late-registration penalty.Check the rolling total monthly. It takes two minutes and it is the difference between planning for VAT and paying for it.What counts towards the £90,000Almost everything you invoice. Labour, materials you supply, call-out charges. The full value of standard-rated and reduced-rated work, plus zero-rated work.What does not count: work that is genuinely exempt or outside the scope of VAT, and the sale of capital assets like a van. Some construction work is zero-rated rather than exempt. New-build housing, for example, can be zero-rated, and that zero-rated turnover does count towards the threshold even though you charge 0% on it. This trips up new-build specialists regularly.It is turnover, not profit. Your costs make no difference to the test.If you work in construction, read this before you registerOnce you are VAT registered and working for other VAT-registered businesses in the CIS chain, the domestic reverse charge may apply to qualifying construction services supplied to customers who are not end users. When it applies, the customer accounts for the VAT and your invoice must say the reverse charge applies.The cash-flow effect depends on your work and purchases. You no longer hold your customer’s VAT before paying it to HMRC, but you may still reclaim eligible input VAT, subject to the normal rules. Some businesses choose monthly VAT returns where that suits their repayment pattern.Should you register voluntarily?Sometimes worth it, sometimes not.Register early if most of your customers are VAT-registered businesses. They may be able to reclaim the VAT, and you may reclaim eligible input VAT on business purchases, subject to the normal rules.Stay out if you mostly work for homeowners. They cannot usually reclaim VAT, so adding VAT can increase the price they pay unless you adjust the VAT-exclusive price.Some sole traders deliberately manage turnover to stay under £90,000. Turning work down is legal, but be careful: it usually costs more than the VAT would have. And splitting the business in two to keep both halves under the threshold is not a way round it. HMRC can direct that artificially separated businesses are treated as a single taxable person, with retrospective effect.Common questionsWhat is the VAT threshold for 2026/27?£90,000 of VAT-taxable turnover over any rolling twelve months. The deregistration threshold is £88,000.Is the threshold based on my tax year?No. It is any twelve consecutive months. Check the rolling total every month, not once a year.What happens if I register late?You owe HMRC the VAT from the date registration should have taken effect, whether or not you charged it to your customers. HMRC can also charge a penalty based on how late you are.Do materials count towards the threshold?Yes, if you are invoicing them to the customer. The test is the full value of what you invoice, not your profit on it.Can I go back under the threshold and deregister?Yes. The test is forward-looking: you can apply as soon as you expect your taxable turnover over the next twelve months to be below £88,000. Your historic turnover does not have to have fallen first, so a business that has just lost its biggest customer can apply straight away.I went over because of one big job. Do I definitely have to register?Not necessarily. You can apply to HMRC for an exception from registration if you can show your turnover for the next twelve months will be below the £88,000 deregistration threshold. Apply at the time. It is much harder to argue after the fact.Related guidesWhen should a tradesperson register for VAT?The VAT reverse charge for construction, explainedMaking Tax Digital: what sole-trader tradespeople need to knowWritten by Chris, founder of TradePilot. Last reviewed 10 September 2026. Figures on this page use the 2026/27 tax year for England, Wales and Northern Ireland. This is general information, not tax advice.