VAT data study

UK VAT Registration Statistics 2026: How Many Businesses Are VAT Registered?

Last reviewed 28 September 2026. Figures are the latest official editions published by that date.

How many UK businesses are actually registered for VAT, and is that number growing or shrinking? HMRC’s annual VAT statistics tell a story most business owners never hear: fewer than half of Britain’s businesses are VAT registered, hundreds of thousands join and leave the register every year, and a small group of very large traders pays three quarters of all the VAT collected. Here are the numbers that matter, from the official sources, as they stand in 2026.

How many UK businesses are registered for VAT in 2026?

HMRC counts VAT traders in two ways, and it helps to know both.

• The VAT population: 2,330,400 traders in 2024/25. This counts every business that was live on the register at 31 March 2025 or sent in a VAT return with something on it during the year. It is HMRC’s main measure, and it rose by 11,400 (+0.5%) on 2023/24.
• Live traders: 2,285,900 at 31 March 2025. This is the register at a single moment, after 234,000 businesses registered during the year and 218,000 deregistered.

That churn is the part that surprises people. Roughly one in ten businesses on the register is replaced in a single year.

The longer trend is gentler than the headlines suggest. The VAT population peaked at 2,554,500 in 2021/22, then fell in 2022/23 and 2023/24 as pandemic era registrations unwound and HMRC tidied up its records for Making Tax Digital. It edged up again in 2024/25, despite the higher £90,000 threshold, helped by a growing number of companies. Over ten years it has grown by 112,500 traders, about 5%.

Zoom out and the picture is starker. The Department for Business and Trade counted 5.7 million private sector businesses at the start of 2025, up 191,000 in a year, but only 2.6 million (46%) were registered for VAT and/or PAYE. The other 3.0 million, mostly sole traders with no employees, sit outside both systems. Almost all of that year’s growth (174,000) came from unregistered businesses. The 2026 edition is due in October or November 2026.

The ONS business register, updated on 24 September 2026, counted 2.79 million VAT and/or PAYE businesses in March 2026, up 1.9% on a year earlier. For the first time since 2017, the number grew in every UK region.

Why do the numbers differ? HMRC’s 2.33 million counts VAT traders only. The ONS’s 2.79 million adds businesses registered for PAYE but not VAT. The 5.7 million business population estimate adds the unregistered majority: small businesses trading below the thresholds.

Registrations vs deregistrations: the comparison nobody talks about

A net gain of 16,000 is a thin margin on nearly half a million moves. Businesses register because they cross the threshold, expect to cross it within 30 days, or choose to register voluntarily. They leave because they close, shrink below the £88,000 deregistration threshold, or restructure.

Getting on the register has become quicker. HMRC processed 95.8% of VAT registrations within 40 days in 2025/26, and 97.9% in March 2026. If you are close to either line, our free UK VAT calculator makes the arithmetic instant.

Who is on the register: company types

The ONS breakdown of VAT and PAYE registered businesses shows how thoroughly the limited company now dominates UK business life:

The direction of travel is one way. A year earlier, companies made up 76.7% of the register; now it is 77.3%, while sole proprietors and partnerships continue to shrink. HMRC’s own VAT figures tell the same story: 1,766,000 of the 2.33 million VAT traders are incorporated companies, against 334,100 sole proprietors and 181,300 partnerships. Incorporation brings limited liability and, for many, a cleaner path through VAT registration and payroll. If you are weighing it up, our guide to VAT for sole traders and freelancers covers the VAT side.

Sectors and regions: where VAT registered businesses cluster

By trade sector, HMRC’s figures make wholesale and retail the giant of the VAT system: 511,300 traders, 22% of the entire VAT population, contributing £57 billion, or 32% of the £177 billion net home VAT liability.

Agriculture, forestry and fishing also has 138,900 VAT traders, which would place it sixth by number of traders.

On the broader ONS register, professional, scientific and technical services is still the largest single industry group at 15.3% of all registered businesses. The fastest growing in the year to March 2026 were property (+6.3%) and education (+5.4%).

London and the South East together hold more than a third of registered businesses, a concentration that has barely moved in a decade of these statistics.

The £90,000 threshold effect

The registration threshold rose from £85,000, where it was frozen from 2017 to 2024, to £90,000 on 1 April 2024. In the government’s words, that is higher than any EU country and joint highest in the OECD, alongside Switzerland. Its fingerprints are all over the data. HMRC reports that 38% of VAT traders declare turnover at or below the threshold: they largely do not have to be registered but choose to be, usually to reclaim VAT on costs or to look established to business customers.

The threshold also distorts behaviour in the other direction. Research has repeatedly found businesses “bunching” just beneath it: turning down work, closing early for the year or splitting activities to avoid the cliff edge. If your turnover is approaching £90,000 over any rolling 12 months, remember the rules: you must register once you go over it, or earlier if you expect to go over it within the next 30 days alone, though HMRC can grant an exception for a temporary spike. Our VAT threshold tracker shows exactly where you stand.

How much VAT does the UK collect?

VAT brought in £179.9 billion in 2025/26, up £8.9 billion (5.2%) on the year and equal to 5.9% of GDP. It is the UK’s third largest tax, after income tax and National Insurance contributions. January 2026 was the biggest month for VAT on record, and the first five months of 2026/27 (April to August) raised £80.6 billion, £3.8 billion more than the same months a year earlier.

Who actually pays it?

The latest detailed split is for 2024/25, when VAT raised £171 billion: £162 billion in home VAT and £9 billion in import VAT not handled through postponed accounting. The burden is extraordinarily concentrated. Traders with turnover above £10 million, just 45,800 businesses or 2% of the VAT population, paid 75% of all net home VAT (£133 billion). The hundreds of thousands of small traders near or below the threshold pay very little on balance, and many get money back.

The bands leave out 159,200 traders (6.8%) whose turnover HMRC does not know, so they add up to 2,171,200 rather than the full VAT population.

That concentration is exactly why the government can afford to keep the threshold high: the businesses it keeps out of VAT would add little to receipts.

The VAT gap is widening again

Not all VAT owed is collected. HMRC’s latest estimate, in Measuring tax gaps 2026, puts the 2024/25 VAT gap at 6.6%, or £12.1 billion, of a theoretical £182.8 billion owed. That is up from a revised 5.8% (£10.3 billion) in 2023/24. HMRC’s first estimate for 2024/25 had been 6.2%, so the picture got worse as more data came in. Over the longer run the gap has fallen sharply, from 14.1% in 2005/06.

HMRC has stopped publishing interim VAT gap updates during the year, so the next estimate will come with Measuring tax gaps 2027, which HMRC usually publishes in June. The gap is one reason compliance activity keeps intensifying: nudge letters, targeted campaigns and Making Tax Digital checks. For honest businesses the message is simple: keep digital records clean, because HMRC is under pressure to close that £12.1 billion hole.

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Sources: HMRC, Annual UK VAT statistics 2024 to 2025; HMRC tax receipts and NICs for the UK; HMRC, Measuring tax gaps 2026 edition; DBT, Business population estimates 2025; ONS, UK business: activity, size and location 2026; HMRC performance data 2025 to 2026. This page is general information, not tax advice.