With the government set to review VAT thresholds in April 2026, many business owners are asking a key question: should we register for VAT voluntarily before then?
While VAT registration is mandatory once your taxable turnover exceeds £90,000, there are cases where registering early can bring strategic advantages or, in some situations, create unnecessary admin.
Below, we explore what you need to consider before making the call.
Understanding voluntary VAT registration
Voluntary registration means joining the VAT system even if your annual turnover is below the £90,000 threshold. Once registered, you must charge VAT on your sales, file regular VAT returns, and keep digital records under Making Tax Digital (MTD).
It’s not a decision to make lightly, but for the right business, the benefits can outweigh the obligations.
The benefits of voluntary VAT registration
1. Reclaim VAT on your purchases
If your business regularly incurs VAT on expenses such as stock, equipment, software, or professional services, registering allows you to reclaim that VAT where they are incurred in connection with taxable sales. This can provide a valuable cashflow benefit, particularly for growing companies reinvesting in their operations.
2. Boost your professional image
Being VAT registered can give your business more credibility, especially when dealing with larger clients or suppliers who are themselves VAT registered. It can make your business appear more established and signal growth.
3. Get ahead of the 2026 threshold changes
With the VAT threshold frozen until 2026, more businesses are expected to cross it naturally due to inflation and growth. Voluntarily registering now allows you to adapt early to the processes and systems you’ll eventually need anyway.
4. Reduce risk of unexpected VAT bills
If you’re close to the threshold, registering early can help you avoid accidentally exceeding it and facing backdated VAT liabilities or penalties.
The potential downsides
1. Increased administrative work
Once you register, you’ll need to file quarterly VAT returns and maintain digital records. This means extra accounting responsibilities and possibly higher bookkeeping costs if you outsource.
2. Not always beneficial for Non-VAT registered customers
Charging VAT means you’ll collect tax on behalf of HMRC, but it can also raise your prices for customers who aren’t VAT registered (for example, individuals or small sole traders). You’ll need to assess whether this could affect demand.
If most of your customers are not VAT registered, you won’t be able to reclaim the VAT from them, which could make your pricing less competitive.
What’s changing in 2026
The government has confirmed that the VAT registration threshold will remain at £90,000 until at least April 2026, when a new review is due.
Given the freeze and rising costs, more small businesses are expected to tip over the limit, meaning they’ll have to register anyway. Those who plan ahead now can:
- Understand their VAT position early
- Avoid rushed registration
- Optimise their pricing and cashflow strategy before the changes hit
How to decide: Is voluntary registration right for you?
Ask yourself:
- Are my clients mostly VAT registered?
- Do I regularly incur VAT on my purchases?
- Am I close to reaching the £90,000 threshold?
- Would VAT registration impact my prices or competitiveness?
If you answered “yes” to the first three, voluntary registration could make sense.
Helping you make the right choice
Our VAT specialists at Haines Watts can help you:
- Assess the financial impact of voluntary VAT registration
- Review your cashflow and pricing strategy
- Register for VAT and set up digital record-keeping systems
- Stay compliant under Making Tax Digital
With the 2026 threshold changes approaching, now is the time to get clarity, not surprises.
Get in touch with your local team today to discuss whether voluntary VAT registration is right for your business.
