Value added tax (VAT)
Registration and deregistration thresholds
The taxable turnover threshold for registration for value added tax (VAT) will remain at £85,000 until April 2022. The deregistration threshold will stay at £83,000 for the same period.
The zero-rate of VAT on printed books, newspapers, magazines and academic journals will be extended to their electronic counterparts from 1 December 2020. The government will consult on the details of the legislation ahead of its implementation.
Postponed accounting for VAT will apply from 1 January 2021 to all imports of goods, including from the EU. The measure is aimed at helping VAT-registered UK businesses that are integrated in international supply chains as they adapt to the UK’s position outside the EU.
VAT on call-off stock
Simplified rules will be introduced for the VAT treatment of intra-EU movements of call-off stock, allowing businesses to delay accounting for VAT until the goods are called off. The legislation will be backdated to goods removed from a Member State on or after 1 January 2020.
Long-term cross-border goods policy
The government will consult informally with stakeholders on the VAT treatment of goods crossing UK borders after the EU exit transition period.
Women’s sanitary products
The zero rate of VAT will be charged on tampons and other women’s sanitary products from 1 January 2021.
Agricultural flat rate scheme
New entry and exit rules for the agricultural flat rate scheme will be introduced from 1 January 2021. Businesses will be able to join the scheme when their annual turnover for farming-related activities is below £150,000.
They must deregister from it once such turnover exceeds £230,000 and register for VAT instead. Businesses with a turnover that exceeds £85,000 for non-farming activities will be ineligible for the scheme and will have to register for VAT.
The flat rate VAT scheme for small businesses can save some traders money and administration costs. Take advice on whether it is right for you, as some businesses pay more VAT under the scheme.
VAT rules on cross-border trading may change after the EU exit transition period. Take advice periodically on how exit from the EU might affect your business.