Are you about to cross the VAT threshold? A restaurant guide for 2026/27
Will price rises push you over the £90,000 VAT threshold? The rolling 12-month test, what counts, a decision rule and a tracker for restaurants.
By the TablePort teamFacts checked 11 min read
Your café had its best autumn yet, and someone mentions that you might be close to the VAT threshold. You have not served many more people, so how could you be?
The UK VAT registration threshold for 2026/27 is £90,000 of taxable turnover in any rolling 12-month period. Check at the end of every month by adding up the last 12 months. If the total goes over £90,000, tell HMRC within 30 days of the end of that month; you are registered from the first day of the second month after you went over. Zero-rated cold takeaway counts towards the total. The deregistration limit is £88,000.
Price rises alone can do it. Our analysis of ONS price data shows restaurant and café prices are 10.1% higher than when the £90,000 threshold was set in April 2024, so a café turning over £81,700 then would reach £90,000 now selling exactly the same. This guide covers the monthly test, what counts, how close inflation brings you, the price effect, the Flat Rate Scheme and a tracker you can copy. For which items carry 20% or 0%, see our restaurant VAT guide.
Last checked: 4 November 2026.
What is the VAT threshold for 2026/27?
The registration threshold is £90,000 and the deregistration limit is £88,000, according to gov.uk's VAT registration thresholds and the VAT Notice 700/1 supplement (updated 5 August 2026). Neither figure changed in the Autumn Budget on 28 October 2026: the gov.uk pages still show them, and Budget-day coverage reported no VAT change for hospitality.
| Period | Registration threshold | Deregistration limit |
|---|---|---|
| 1 April 2017 to 31 March 2024 | £85,000 | £83,000 |
| From 1 April 2024 | £90,000 | £88,000 |
The threshold does not rise with inflation, so a café that simply puts its prices up each year gets closer to it without serving more people. The next section puts a number on that.
Will price rises alone push you over the VAT threshold?
They can, within a year, if your rolling total is above about £86,100.
Restaurant prices have risen every year while the threshold stood still. Our analysis of the ONS consumer prices index for restaurants and cafés (series D7EW), latest figure September 2026, published 21 October 2026:
| Period | Restaurant and café prices | What it means for the threshold |
|---|---|---|
| April 2017 (£85,000 set) to September 2026 | +50.8% | £85,000 then is worth £128,200 at today's restaurant prices |
| April 2024 (£90,000 set) to September 2026 | +10.1% | £81,700 of sales then is £90,000 today for the same food |
| September 2025 to September 2026 | +4.5% | £86,100 today becomes £90,000 in a year on price rises alone |
In real terms the threshold is about 30% lower for restaurants than it was in 2017. The latest annual rate of 4.5% is our default for the tracker below; change it to your own planned price rise.
The decision rule. Divide £90,000 by your rolling total. If the answer is less than 1 plus your expected price rise (1.045 at 4.5%), price rises alone take you over within a year:
| Rolling 12-month total | At 4.5% a year in price rises alone | What to do now |
|---|---|---|
| Under £82,400 | More than two years from £90,000 | Check the total monthly |
| £82,400 to £86,100 | One to two years away | Plan prices and margins with registration in mind |
| £86,100 to £90,000 | Within 12 months | Decide: reprice, register voluntarily, or prepare to register |
| Over £90,000 | Over | Tell HMRC within 30 days of the end of the month |
Any growth in covers brings these dates forward. You are not unusual if you sit in these bands: the ONS UK business: activity, size and location 2026 tables (published 24 September 2026) count 17,495 of the 108,500 restaurant and mobile food businesses registered for VAT or PAYE, about 1 in 6, with turnover between £50,000 and £99,999, the band the threshold falls in.
How does the rolling 12-month VAT test work?
gov.uk's Register for VAT page sets out two tests.
The backward look. At the end of every month, add up your taxable turnover for the last 12 months. If it is over £90,000, you must register within 30 days of the end of that month. Your effective date of registration is "the first day of the second month after you go over the threshold".
The forward look. If you expect your taxable turnover in the next 30 days alone to go over £90,000, you must register by the end of those 30 days, and your effective date is the date you realised. That is rare for a restaurant, but a large one-off event or a takeover can trigger it.
Here is a worked example with illustrative figures. A café takes £6,500 a month from August 2025 to July 2026, then has a busy autumn.
| Month ending | That month's sales | Rolling 12-month total | Over £90,000? |
|---|---|---|---|
| 31 July 2026 | £6,500 | £78,000 | No |
| 31 August 2026 | £9,000 | £80,500 | No |
| 30 September 2026 | £9,500 | £83,500 | No |
| 31 October 2026 | £10,000 | £87,000 | No |
| 30 November 2026 | £10,500 | £91,000 | Yes |
Each month the oldest month drops out and the newest goes in. At the end of November 2026 the café is over. It must tell HMRC by 30 December 2026, and it is VAT-registered from 1 January 2027. From that date, VAT is due on its sales whether or not it has its VAT number yet.
Note what happened: three good months on top of a steady year were enough. Owners who check once a year, at their accounts date, are the ones who register late.
What counts towards the £90,000?
Taxable turnover is the total of everything you sell that is not exempt from VAT, including zero-rated items. Paragraph 3.4 of VAT Notice 700/1 (updated 5 August 2026) sets this out.
| Counts | Does not count |
|---|---|
| Eat-in food and drink (standard-rated) | Exempt supplies |
| Hot takeaway and hot drinks (standard-rated) | Selling capital assets, such as an old coffee machine |
| Cold takeaway food (zero-rated, but still taxable) | Genuinely voluntary tips |
| Delivery orders of food you prepare | |
| Alcohol | |
| Compulsory service charges |
Tips and service charges follow VAT Notice 709/1: "If you make a service charge, it's standard-rated", while a tip a guest freely gives above the bill carries no VAT, so it stays out of your turnover. Our service charge guide explains when a charge counts as compulsory.
The cold takeaway point catches sandwich shops and bakeries. Zero-rated does not mean ignored: every cold sandwich counts towards the threshold, even though no VAT would be charged on it after registration. Our café EPOS guide covers setting up eat-in and takeaway prices on the till so each sale lands in the right VAT rate.
If you buy an existing business as a going concern, you add the seller's turnover for the past 12 months to your own when you apply the test (paragraph 3.8). That can put you over on day one.
What happens to your prices when you register?
Once you are registered, one-sixth of every standard-rated sale is VAT. That is 16.7% of the price on the menu.
| Item | Price now | If you keep the price | Price to keep the same income |
|---|---|---|---|
| Flat white | £3.50 | You keep £2.92 | £4.20 |
| Brunch dish | £12.00 | You keep £10.00 | £14.40 |
| Pint | £6.00 | You keep £5.00 | £7.20 |
For a café taking £95,000 a year in standard-rated sales, keeping prices the same means handing about £15,800 a year to HMRC. On thin margins, that can be the whole profit. Most owners do something in between: raise some prices, absorb some, and reclaim VAT on purchases to recover part of the gap.
Registration has an upside too. You can reclaim VAT on equipment, fit-out, energy and many supplies, which is why some businesses below the threshold register voluntarily, for example ahead of a big fit-out.
Is the VAT Flat Rate Scheme worth it for a restaurant?
Under the Flat Rate Scheme you pay HMRC a fixed percentage of your VAT-inclusive turnover and, mostly, do not reclaim VAT on purchases. The figures are on gov.uk's Flat Rate Scheme pages:
| Rule | Figure |
|---|---|
| Rate for catering, restaurants, takeaways | 12.5% |
| Rate for pubs | 6.5% |
| Limited cost business rate | 16.5% (goods under 2% of turnover, or under £1,000 a year) |
| First-year discount | 1 percentage point off in your first year of VAT registration |
| Join if taxable turnover is | £150,000 or less, excluding VAT |
| Must leave if total income goes over | £230,000 including VAT |
| Capital purchases you can still reclaim on | A single purchase of £2,000 or more including VAT |
The leaving and capital purchase rules are in VAT Notice 733 (updated 18 December 2025). Restaurants buy food, so most will not be limited cost businesses.
Worked example: a restaurant with £120,000 of sales before VAT, all eat-in, so £144,000 including VAT. Assume £5,000 of VAT on purchases.
| Method | Calculation | VAT paid |
|---|---|---|
| Standard accounting | £24,000 output − £5,000 input | £19,000 |
| Flat Rate, first year | £144,000 × 11.5% | £16,560 |
| Flat Rate, after first year | £144,000 × 12.5% | £18,000 |
Here the scheme saves £2,440 in year one and £1,000 after, plus less bookkeeping. Change the assumptions and the answer flips:
- Lots of cold takeaway. The flat rate applies to all your turnover, including zero-rated sales. A sandwich shop that would pay no VAT on half its sales under standard accounting usually loses on the flat rate.
- Big purchases ahead. If you are fitting out, standard accounting lets you reclaim the VAT on it. The scheme only allows single capital purchases of £2,000 or more.
Run both methods on your own figures with your accountant before choosing. The wider VAT rules for food, drink and service charges are in our restaurant VAT guide.
Can I stay under the VAT threshold legally?
Sometimes, and only by genuinely trading less or differently.
- A one-off spike. If you go over but can show your turnover in the next 12 months will be below £88,000, you can ask HMRC for an exception from registration (paragraph 3.7 of Notice 700/1).
- Opening hours. Some owners close an extra day rather than register. Run the numbers first: the lost sales often cost more than the VAT.
- Splitting the business. HMRC has powers to treat artificially separated businesses as one. Two companies running one café is the classic case it challenges.
If you should have registered and did not, you owe VAT on your sales from the date you should have been registered, even though you never charged it. HMRC warns the late-registration penalty "could be equal to the amount of VAT you should have paid" (paragraph 14.2 of Notice 700/1). Check with your accountant for your situation.
A VAT threshold tracker you can copy
Set this up in a spreadsheet and update it on the first working day of each month. Column A is the month, column B is that month's taxable sales (VAT-inclusive prices are fine before you register, because you are not charging VAT yet). Cell G1 holds your expected price rise for the next 12 months.
VAT THRESHOLD TRACKER
G1: 4.5% (expected price rise; 4.5% = ONS restaurants and cafés,
year to September 2026. Change to your own.)
A: Month B: Taxable sales C: Rolling 12 months D: In 12 months E: Months to £90,000 F: Status
Row 2 Aug 2025 6500
...
Row 13 Jul 2026 6500 =SUM(B2:B13)
Row 14 Aug 2026 9000 =SUM(B3:B14)
Row 15 Sep 2026 9500 =SUM(B4:B15)
D13 (same customers, new prices), copied down:
=C13*(1+$G$1)
E13 (months until price rises alone reach £90,000), copied down:
=IF(C13>=90000,0,ROUND(LN(90000/C13)/LN(1+$G$1)*12,0))
F13 (status), copied down:
=IF(C13>90000,"REGISTER: tell HMRC within 30 days",
IF(D13>90000,"WARNING: over within 12 months on prices alone",
IF(C13>80000,"WATCH: within £10,000","OK")))
Include in column B: eat-in, takeaway (hot and cold), delivery,
alcohol, compulsory service charges.
Leave out: voluntary tips, sales of old equipment.
The warning status uses the projection, not just the gap, so it fires earlier for a café whose prices are rising fast. That gives you time to decide on prices before the registration date arrives.
Can TablePort handle this for you?
TablePort can supply the monthly figure for your tracker:
- Daily sales on every report. The daily report records each day's sales, so the monthly total for column B is a sum, not a guess.
- Accounting exports. Daily sales, tips, tax, voids and comps are exported in a form your accountant can use, and sales sync to Xero or QuickBooks.
- Tips kept apart. Tips are recorded separately from sales, which matters because voluntary tips do not count towards the threshold.
The limit: TablePort does not register you with HMRC or choose your VAT scheme. Your accountant does that. See the POS page for reports and exports.
Frequently asked questions
- What is the VAT threshold in the UK for 2026/27?
£90,000 of taxable turnover in any rolling 12 months. The deregistration limit is £88,000. Both have applied since 1 April 2024 and were not changed in the Autumn Budget 2026.
- Does cold takeaway food count towards the VAT threshold?
Yes. Cold takeaway food is zero-rated, which is still a taxable supply, so it counts towards the £90,000 even though you would charge 0% VAT on it once registered.
- What happens if I go over £90,000 by a few hundred pounds?
You still have to register. Tell HMRC within 30 days of the end of the month you went over; you are registered from the first day of the second month after. If you can show your next 12 months will be under £88,000, you can ask HMRC for an exception.
- Do I have to put my prices up by 20% when I register for VAT?
No, but VAT will take one-sixth of every standard-rated sale. To keep the same income you would need to raise prices by 20%. Most owners raise some prices, absorb some of the cost and reclaim VAT on purchases.
- Can inflation push me over the VAT threshold?
Yes. The threshold has been £90,000 since April 2024, while ONS figures show restaurant and café prices rose 10.1% to September 2026. At the latest annual rate of 4.5%, a business with a rolling total of about £86,100 reaches £90,000 within a year without serving a single extra customer.
- How do I work out my rolling 12-month turnover?
At the end of each month, add up your taxable sales for that month and the 11 months before it. Do it every month, not once a year. The tracker above does it with one formula.
