The VAT registration thresholds changed from 1 April 2026. Here is how to decide whether voluntary VAT registration still makes sense.
Note
Current as of 9 May 2026. Verify unusual facts against the official source before filing or advising a client.
Answer First
Voluntary VAT registration can make sense after the R2.3 million threshold change if your business already exceeds the voluntary threshold, buys significant VAT-bearing inputs, serves VAT-registered customers, and can handle VAT201 admin. It is usually weaker for low-margin, consumer-facing businesses that cannot easily absorb VAT pricing.
Worked Example
A design studio with R900,000 annual taxable supplies and R180,000 VAT-inclusive software and subcontractor costs may benefit from claiming input VAT, especially if clients are VAT vendors. A small salon selling mostly to consumers may struggle to raise prices by 15 percent without hurting demand.
Quick Reference Table
Factor | Voluntary VAT helps when | Voluntary VAT hurts when |
|---|---|---|
Customers | Mostly VAT vendors | Mostly final consumers |
Purchases | High VAT-bearing inputs | Low input VAT |
Cash flow | VAT collections are ring-fenced | VAT cash is used for operations |
Admin | Records are clean and current | Invoices and bank records are messy |
The New Thresholds
SARS states that the compulsory registration threshold increased from R1 million to R2.3 million and the voluntary registration threshold increased from R50,000 to R120,000, effective 1 April 2026.
Decision Checklist
Do not register only because it sounds more professional. Model the VAT effect on price, input claims, admin time, and client expectations first.
- Can your customers claim VAT back?
- Can you issue compliant tax invoices?
- Can you file VAT201 returns on time?
- Will pricing still work after VAT?
Related Accounter Resources
- VAT Registration Threshold Checker
- VAT Calculator
- How to Register for VAT
- VAT Threshold News
- Accounter Pricing
Official Sources
FAQs
What is the compulsory VAT threshold from 1 April 2026?
SARS states that the compulsory registration threshold increased to R2.3 million in taxable supplies over a 12-month period.
What is the voluntary VAT threshold?
The voluntary threshold increased to R120,000 from 1 April 2026.
Can I deregister if I am below R2.3 million?
Possibly, but deregistration has tax and cash-flow consequences. Review the numbers with an accountant first.