Budget 2026: what it means for you and your business —
In short
You must register for VAT when your taxable turnover exceeds £90,000 over any rolling 12-month period — not your accounting year — or if you expect to exceed it within the next 30 days. Because the test is rolling, businesses cross it mid-year without realising. All VAT-registered businesses must keep digital records and file under Making Tax Digital for VAT, regardless of turnover.
You must register when your VAT-taxable turnover exceeds £90,000 in any rolling 12-month period, or if you expect to exceed it in the next 30 days alone.
The rolling test is the trap. It is not measured against your accounting year or the tax year — you must monitor it month by month. Turnover from, say, June to the following May can cross the threshold even if no calendar year does.
You can also register voluntarily below the threshold, which is beneficial if you sell mainly to VAT-registered customers and incur input VAT — and actively harmful if you sell to consumers. We model it before you decide.
Standard accounting — VAT on invoices issued and received. Cash accounting — VAT accounted for when money actually moves. Valuable if customers pay slowly. Flat rate scheme — a fixed percentage of gross turnover, with limited input VAT recovery. Simple, but often more expensive than it looks. Annual accounting — one return a year with instalments. Helps cash-flow planning.
The right choice depends on your margins, your customers and your payment cycles. It is worth modelling rather than defaulting.
MTD for VAT applies to all VAT-registered businesses, regardless of turnover. You must keep digital records and file returns through compatible software, with digital links between systems.
“Digital links” is the part firms fail on: manual copy-and-paste between a spreadsheet and your software does not qualify. The data must flow electronically. We make sure your records and software genuinely comply, rather than appearing to.
The domestic reverse charge for construction shifts responsibility for accounting for VAT from the supplier to the customer on most CIS-reportable supplies between VAT-registered businesses.
It materially affects cash flow for subcontractors, who no longer receive the VAT element on their invoices, and it is easy to apply incorrectly. If you work in construction, this needs to be got right — see also our Payroll, Pension & CIS service.
We monitor the rolling threshold for you — so you never register late by accident.
Scheme choice modelled, not guessed — flat rate is not always cheaper.
Genuine MTD compliance — digital links that actually work, not copy-and-paste.
Construction, partial exemption and cross-border VAT handled properly.
Xero Gold Partner — the software and the compliance in one place.
This page provides general information about the 2026/27 UK tax year and is not advice on your particular circumstances. Tax and regulatory rules change frequently. Please contact us before acting, or refraining from acting, on anything set out here. LMJ Group is a firm of Chartered Accountants regulated by the ICAEW. LMJ Group is not a registered auditor and does not provide audit services. Last reviewed: July 2026.
