Value added tax (VAT)

Registration and deregistration thresholds

The VAT registration threshold will remain at £85,000 and the deregistration threshold will stay at £83,000 until 31 March 2024.

Dental prostheses imports

The current VAT exemption for dental prostheses supplied by registered dentists and other dental care professionals and technicians will be extended to imports of dental prostheses by these persons.

The measure will take effect on or after Royal Assent to Finance Bill 2021 but will apply retrospectively from 1 January 2021.

Second-hand motor vehicle export refund scheme

A second-hand motor vehicle export refund scheme will be introduced. Businesses that remove used motor vehicles from Great Britain for resale in Northern Ireland or the EU may be able to claim a VAT refund following export.

This will ensure that Northern Ireland motor dealers will remain in a comparable position to those applying the VAT margin scheme elsewhere in the UK.

The VAT margin scheme will be extended to Northern Ireland for motor vehicles sourced from Great Britain until the second-hand motor vehicle export refund scheme is implemented, if the government reaches a relevant agreement with the EU. It will then apply retrospectively from 1 January 2021.

Implementation of VAT rules in free zones

Additional elements will be introduced to the previously announced VAT-free zone model for freeports, with effect from 3 November 2021.

A free zone exit charge will ensure that businesses do not gain an unintended tax advantage from the zero rate in the free zone model. Existing VAT law will be amended to ensure that the free zone rules and warehousing rules are mutually exclusive.

Penalties for late submission and late payment

The government has confirmed that the new late submission and late payment penalties for VAT will come into effect from accounting periods starting on or after 1 April 2022.


Making tax digital. From April 2022 the requirement to keep digital records and submit VAT returns using MTD compatible software will be extended to VAT-registered businesses that are below the £85,000 VAT registration threshold. Make sure you are ready.