Since April 2017, the VAT registration threshold has been frozen at £85,000, and we can now confirm that it will remain at this fixed level until April 2026.
Nevertheless, it is important to prepare for this to be cut in the future. Why? Because the Chancellor has raised the point that the VAT registration threshold in the UK is more than twice as high as the average in OECD and EU countries.
What Does The Freeze Mean For Businesses?
As inflation is now running at over 11%, this VAT threshold freeze is likely to drag many more companies into compulsory VAT registration if they are to increase their prices alongside this.
Unless a business owner can show that they are digitally excluded from making tax digital (MTD), once a company is registered for VAT, they must maintain digital records and submit all VAT returns using MTD-compatible software.
However, there have been some teething problems with this updated VAT registration process, meaning it can take many weeks to receive a new VAT number. Once your turnover for the previous 12 months exceeds £85,000 or is expected to reach this in the next 30 days, business owners must act quickly to register for VAT.
There are significant penalties in place for late registration, but our team are on hand to guide you through the VAT registration process and how to remain MTD compliant. Please contact us to book your appointment.