Deregistering for VAT means cancelling your VAT registration. You must cancel if you stop trading or stop making taxable sales. You can choose to cancel if your taxable turnover will fall below £88,000 in the next 12 months.
When you must deregister
You have to cancel your registration if:
- You stop trading
- You stop making taxable sales
- You join a VAT group
- You sell the business, in most cases
You must tell HMRC within 30 days of the reason happening.
When you can choose to deregister
You can ask to cancel if you expect your taxable turnover to stay below the £88,000 deregistration threshold in the next 12 months. This is a choice, not a duty. It can suit a business that has shrunk or changed what it sells.
| Limit | Amount |
|---|---|
| Registration threshold | £90,000 |
| Deregistration threshold | £88,000 |
How to deregister
You usually cancel online through your VAT account on GOV.UK. HMRC confirms the date your registration ends. From that date you stop charging VAT and stop adding VAT to your prices.
Your final VAT return
After the cancellation date you send one last VAT return. This covers the period up to the date you deregister.
[ Infographic: Steps to deregister for VAT ]
Brief: a short path showing check you qualify, tell HMRC, get your end date, file the final return.
Alt text: Steps to deregister for VAT, from checking you qualify to filing the final return.
Caption: Cancelling VAT registration in four steps.
VAT on stock and assets
There is one point that catches people out. On your final return you may have to pay VAT on stock and assets you still hold, if you reclaimed VAT when you bought them. This usually applies when the VAT due on those items would be more than £1,000.
Because of this, it often pays to run down stock before you deregister, so there is less to account for.
Frequently asked questions
When do I have to deregister for VAT? When you stop trading, stop making taxable sales, or your business is sold. You must tell HMRC within 30 days.
When can I choose to deregister? When you expect your taxable turnover to stay below £88,000 in the next 12 months.
How do I cancel my VAT registration? Usually online through your VAT account on GOV.UK. HMRC confirms your end date.
Do I pay VAT on stock when I deregister? You may. If you reclaimed VAT when you bought stock or assets you still hold, you may owe VAT on them, usually when the amount is more than £1,000.
Do I still file a return after deregistering? Yes. You send one final VAT return covering the period up to your cancellation date.