The VAT registration and deregistration thresholds will remain the same for a further two years until April 2022.
The current taxable turnover registration threshold at £85,000 is the highest in the EU, where the average is far lower. The Office of Tax Simplification report published in 2017 recognised the distortions the threshold can cause and recommended a Government review. In the absence of clear guidance from a call for evidence, the registration threshold and the deregistration threshold (£83,000) will remain the same until 31 March 2022, which extends the two year period previously announced in last year’s autumn Budget.
"Although a high threshold can benefit smaller businesses who do not need to register for VAT, it is seen as creating a ‘cliff-edge’ and a bunching effect of businesses choosing to remain below the threshold, which limits their growth. Any reduction to the threshold will need to be implemented carefully, to ensure that it does not simply shift the cliff-edge effect to a lower level. Maintaining the threshold at the same level for four years is only seen as a temporary measure until the Government revisits the matter and provides a longer term solution."
When will it apply?
There will be no change until April 2022.