What the VAT threshold is in 2026

The VAT registration threshold is £90,000 of taxable turnover. Once your sales of VAT-taxable goods and services pass that figure over any rolling 12 month period, you have to register with HMRC and start charging VAT. It has sat at £90,000 since April 2024, up from £85,000 before that.

Two things catch trades out here. First, it's a rolling 12 months, not your accounting year, so the clock never really resets. Second, it's turnover, not profit. A roofer turning over £8,000 a month is past the line well before they'd think of themselves as a big business.

When you have to register

There are two triggers, and you only need to hit one of them.

The backward look: your taxable turnover over the last 12 months goes past £90,000. You've got 30 days from the end of the month you went over to register, and you're VAT-registered from the first day of the month after that.
The forward look: you expect to take more than £90,000 in the next 30 days on its own, usually off the back of one big contract. Here you register by the end of those 30 days and you're registered from the date you realised.

Miss the deadline and it costs you

Register late and HMRC can charge a penalty on top of the VAT you should have been collecting all along. That second part is the one that hurts, because you usually can't go back to a finished domestic job and ask the customer for another 20%. You end up paying it out of your own margin.

The reverse charge changes things if you work for contractors

This is the bit general VAT guides skip and trades really need to know. Since March 2021, the VAT domestic reverse charge applies to most construction work between VAT-registered businesses. If you're a VAT-registered subcontractor invoicing a VAT-registered contractor, you don't add VAT to your invoice. The contractor accounts for it instead.

So plenty of subcontractors who register never actually collect much VAT from their main customers. You still reclaim the VAT on your own materials and costs, which is often the real reason to register in the first place. Your invoice just needs to state that the reverse charge applies and show the rate that would have applied.

What changes the day you register

Registration isn't only about adding 20% to your prices. A few things shift at once.

You charge VAT on your standard work, usually at 20%. Some jobs differ, like the 5% reduced rate on certain energy-saving work, or zero rate on qualifying new builds.
You file VAT returns, normally every quarter, through Making Tax Digital. That means digital records and submitting through compatible software, not a paper form or a manual login.
You reclaim the VAT on your business purchases, from materials to the van to your tools.
Your prices effectively rise for any customer who can't reclaim VAT, which for most trades means homeowners.

Should you register before you have to?

You can register voluntarily below £90,000, and for some trades it makes sense. If most of your work is for VAT-registered businesses, or you spend heavily on materials, the VAT you reclaim can outweigh the admin. The reverse charge often means you're not adding cost to those customers anyway.

If you work mainly for homeowners, think twice. Voluntary registration puts 20% on your prices for people who can't claim it back, and that can make you look dearer than the next person who hasn't registered. The Flat Rate Scheme can simplify the sums, but run the numbers on your own mix of work before you commit.

How to track turnover so you are never caught out

Most people who get a late registration penalty simply weren't watching the right number. They looked at the tax year, or at profit, and the rolling figure crept past £90,000 without anyone noticing.

Keep a running total of the last 12 months of taxable sales and check it every month. If you're within a few thousand of the threshold, you want to know now, not at year end.

How Traddie helps

Traddie totals your taxable turnover on a rolling 12 month basis and flags you well before you reach £90,000, so registration becomes a decision you make on purpose rather than a deadline you miss. When you do register, your invoices can apply VAT or the construction reverse charge for you, and your records stay digital and ready for Making Tax Digital.