When and How to Deregister for VAT: A Complete UK Guide (2026)

What Is VAT Deregistration?

VAT deregistration — also called cancelling your VAT registration — is the formal process of removing a business from HMRC’s VAT register. Once deregistered, the business must stop charging VAT on its sales and loses the right to reclaim VAT on purchases.

Deregistration is not the same as a business going dormant. A dormant business may still hold a valid VAT registration. Deregistration is a deliberate, permanent cancellation that must be formally applied for and confirmed by HMRC.

VAT deregistration can be either voluntary (you choose to cancel because your turnover has fallen) or mandatory (you’re required to cancel because you’ve stopped making taxable supplies entirely).

If you’re looking to register for VAT rather than cancel an existing registration, see our step-by-step guide to how to register for VAT in the UK.

Can I Deregister for VAT?

A business can deregister for VAT under two sets of circumstances: voluntary and mandatory. Understanding which applies to your situation determines both your eligibility and your obligations.

Voluntary VAT Deregistration

You can apply to deregister voluntarily if you reasonably expect your VAT-taxable turnover in the next 12 months to fall below the VAT deregistration threshold (currently £88,000 – only for UK companies). This is a forward-looking test — HMRC is asking what you expect your turnover to be over the coming year, not what it was last year.

Other grounds for voluntary deregistration include:

• Change of business structure  — a sole trader closes down, a partnership dissolves, a company ceases trading
• Change in the nature of supplies  — you stop making VAT-taxable sales, e.g. you shift exclusively to exempt supplies such as financial services or certain property transactions
• Transfer of business as a going concern  — when you sell your business as a going concern, VAT registration transfers to the new owner and the previous registration is cancelled

If you originally registered voluntarily (below the mandatory threshold), you can deregister voluntarily even if your current turnover is above the deregistration threshold — provided the original conditions for voluntary registration no longer apply.

If you’re a foreign entity – you can de-register if you no longer want to hold stock in the UK.

Mandatory VAT Deregistration

Mandatory deregistration is required when a business permanently stops making taxable supplies. You must notify HMRC within 30 days of the date you stopped making taxable supplies. Failure to notify on time can result in a late notification penalty.

The VAT Deregistration Threshold

The VAT deregistration threshold is currently £88,000 — the level below which your expected taxable turnover must fall for you to be eligible to cancel your VAT registration voluntarily.

This figure is intentionally set £2,000 below the VAT registration threshold (£90,000) to create a buffer zone — preventing businesses whose turnover fluctuates around the registration limit from constantly registering and deregistering. For a full breakdown of how the registration threshold works, see our guide to the UK VAT threshold 2026.

The test is forward-looking, not historical.  You cannot deregister simply because your turnover was below £88,000 last year. HMRC requires a reasonable expectation that your taxable turnover will remain below the threshold over the next 12 months. If your business is recovering or seasonal, HMRC may scrutinise the application.

How to Deregister for VAT: Step by Step

There are two ways to cancel your VAT registration: online via your HMRC VAT account, or by post using the VAT 7 form. Online is faster and the recommended route for most businesses.

Step 1 — Decide Your Effective Deregistration Date

The effective date is the date from which you are no longer VAT registered. You stop charging VAT from this date. Choose carefully: backdating can create underpaid VAT liability; a future date means you must continue charging VAT in the interim.

Step 2 — Apply Online via Your HMRC VAT Account

1. Log in to your Government Gateway account at gov.uk/register-for-vat/cancel-your-registration
2. Navigate to your VAT account and select “Cancel VAT registration”
3. Provide your reason for deregistration and your effective date
4. Declare any business assets on which you reclaimed VAT — HMRC uses this to assess whether an output tax charge applies
5. Submit the application

HMRC will confirm your deregistration in writing, typically within three weeks of receiving an online application. Do not stop charging VAT until you have received written confirmation — the effective date governs when you stop, but the confirmation letter is your proof of deregistration.

Step 3 — Alternative: Apply by Post Using the VAT 7 Form

Download the VAT 7 (Application to Cancel Your VAT Registration) form from gov.uk, complete it, and post it to the HMRC VAT Registration Service. Postal applications take longer — allow four to six weeks.

What Information HMRC Requires

• The effective date of deregistration
• Your reason for deregistration
• Details of any assets held at the deregistration date on which VAT was reclaimed (stock, equipment, vehicles)
• Business contact details

What Happens After You Deregister for VAT?

Deregistration removes your VAT obligations going forward — but several obligations apply to the period up to your deregistration date.

Your Final VAT Return

You must submit a final VAT return covering the accounting period up to your effective deregistration date. This is due by the normal filing deadline for that period. Any VAT owed must be paid; any overpayment will be refunded by HMRC. Deregistration does not cancel outstanding returns.

VAT on Stock at Deregistration

If you hold trading stock at your deregistration date on which you reclaimed input VAT, HMRC requires you to account for output VAT on that stock. Stock is valued at cost price — not selling price. The output tax due is the input VAT originally reclaimed, not a new calculation on market value.

VAT on Business Assets (Equipment, Vehicles, Fixtures) at Deregistration

Fixed business assets — equipment, vehicles, computers, fixtures — are treated differently from stock. These are valued at market value on the deregistration date (what you could realistically sell them for), and you must account for output VAT on that value if you reclaimed VAT when you bought them.

The rule for both stock and fixed assets applies only if the total output VAT due would exceed £1,000. If it is £1,000 or less, no output tax charge arises. For businesses holding significant stock or equipment, this charge can be material.

For the full technical rules on assets at deregistration, see HMRC’s VAT Notice 700/11: Cancelling your registration.

VAT Invoices After Your Deregistration Date

From your effective deregistration date, you must stop issuing VAT invoices. Your VAT registration number is cancelled — you have no right to charge VAT on sales, and invoices showing VAT are misleading to customers and potentially fraudulent.

If you accidentally issued a VAT invoice after your effective deregistration date:

• Issue a credit note  cancelling the original VAT invoice
• Reissue the invoice  without any VAT charge or VAT number
• Repay to HMRC  any VAT collected on that invoice — you cannot keep it

You should also update your invoicing software, email templates, and any stationery to remove your VAT number and VAT amounts before your deregistration date takes effect. For a reference on what VAT invoices must legally include while you are registered, see our guide to VAT invoice requirements in the UK.

What About Your EU VAT Registrations?

Deregistering from UK VAT has no effect on any EU VAT registrations you hold. EU member states each administer their own VAT register independently. A German VAT registration, for example, continues regardless of what happens to your UK registration.

However, if you continue to sell goods or services B2C into EU markets after deregistering from UK VAT, EU rules still apply in full:

• If your cross-border EU B2C sales exceed €10,000 per year, you must either register for VAT in each destination EU country or use the One Stop Shop (OSS) scheme to file a single return covering all EU sales
• If you import goods into the EU with a value below €150 and sell direct to EU consumers, the IOSS (Import One Stop Shop) scheme may apply
• If you hold stock in EU fulfilment centres (e.g. Amazon FBA in Germany, France, or Poland), you have a taxable presence in those countries and must hold local VAT registrations — independent of your UK status

VAT Deregistration Pitfalls to Avoid

Most problems with VAT deregistration are avoidable. Here are the key mistakes that generate unexpected tax liabilities and HMRC queries.

6. Failing to account for VAT on stock and assets.  This is the most common and most expensive mistake. Calculate your output tax exposure on both stock (at cost) and fixed assets (at market value) before applying. Do this before you set the effective date.
7. Getting the effective date wrong.  If you backdate your deregistration to a point when your turnover had not yet fallen below the threshold, HMRC can determine that VAT was underdeclared during that period and raise an assessment.
8. Continuing to charge VAT after the effective date.  You must stop from the effective date — not from the date you receive HMRC’s confirmation letter. VAT collected after the effective date must be repaid to HMRC.
9. Issuing VAT invoices after deregistration.  As covered above, VAT invoices issued after your effective date must be cancelled and reissued. Collecting VAT you’re not entitled to is a serious compliance failure.
10. Missing the final VAT return.  Deregistration does not cancel your obligation to file. The final return for the period ending on your deregistration date must still be submitted by the normal deadline.
11. Missing legitimate input tax on the final return.  Your final return is your last opportunity to reclaim input tax on costs incurred before your deregistration date. Once filed, that window closes permanently.
12. Assuming VAT deregistration cancels your EPR obligations.  It does not. Extended Producer Responsibility (EPR) obligations — including UK Packaging EPR, WEEE, and batteries — are based on what products you sell and in which markets, not on your VAT status. Deregistering from VAT while continuing to sell physical goods does not end EPR compliance requirements. See our EPR guide for UK e-commerce sellers for what these obligations cover.

Voluntary vs Mandatory VAT Deregistration: A Summary