UK VAT Calculator

The VAT registration threshold for 2026/27 is £90,000. This applies to your rolling 12-month taxable turnover — not your calendar year or financial year. If your taxable turnover exceeds £90,000 in any consecutive 12-month period, you must register for VAT with HMRC within 30 days of the end of the month in which the threshold was breached.

Yes. You can register for VAT voluntarily at any time, even if your turnover is well below £90,000. This can be beneficial if you have significant VAT-able costs you want to reclaim, or if your clients are VAT-registered and can reclaim the VAT you charge them. The main downside is the additional administrative burden of submitting quarterly VAT returns.

Zero-rated supplies are technically VATable but charged at 0% — they count towards your registration threshold and you can reclaim input VAT on related costs. Exempt supplies fall outside the VAT system entirely — they do not count towards the threshold and you cannot reclaim input VAT on costs associated with making exempt supplies. Common exempt supplies include financial services, insurance, education and healthcare.

Most VAT-registered businesses submit quarterly VAT returns. However, you can apply for monthly returns if you regularly receive VAT repayments (for example, if you make mainly zero-rated or export sales). Annual accounting is available for businesses with a turnover below £1.35 million — you make monthly estimated payments during the year and submit one annual return.

The flat rate scheme is most beneficial for service-based businesses with low VAT-able purchases. As a rule of thumb, if your VAT-able purchases are less than the sector flat rate percentage of your gross turnover, the standard scheme is likely better. If you are classified as a limited cost trader (purchases below 2% of turnover or £1,000 per year), the 16.5% rate usually makes the standard scheme more advantageous.

If you fail to register for VAT on time, HMRC will charge a penalty ranging from 5% to 15% of the VAT you owed from the date you should have registered. The penalty increases with the length of the delay. You will also owe the VAT itself, which you may struggle to recover from customers if you did not charge it at the time. It is always better to register early if you are approaching the threshold.

Yes, subject to conditions. You can reclaim input VAT on goods purchased up to 4 years before your VAT registration date, provided the goods are still on hand and used in your VAT-registered business. For services, the limit is 6 months before registration. You will need valid VAT invoices as evidence of the VAT paid.

For B2B services sold to VAT-registered businesses in other countries, the general rule is that VAT is charged in the customer's country — so you do not charge UK VAT and the transaction is outside the scope of UK VAT. For B2C services to consumers outside the UK, different rules apply depending on the type of service. Always seek advice for cross-border VAT as the rules are complex and change frequently.

All VAT-registered businesses must use MTD-compatible software to keep digital records and submit VAT returns. Popular options include Xero, QuickBooks, Sage, FreeAgent, and Kashflow. HMRC also maintains a list of approved software on their website. Spreadsheets can be used but must be linked to HMRC's systems via bridging software.

You can apply to deregister for VAT if your taxable turnover falls below the deregistration threshold of £88,000. Note this is £2,000 lower than the registration threshold — this gap prevents businesses from constantly registering and deregistering as their turnover fluctuates around the limit. You can also deregister if you cease making VATable supplies.