The VAT registration threshold (currently £85,000) and deregistration threshold (currently £83,000) will remain unchanged for a further two years until April 2022.
This follows the government publishing a call for evidence in March 2018 inviting views on the effect of the current threshold. However, the responses provided did not present a clear option for change.
The government will look again at the possibility of introducing a smoothing mechanism to the VAT registration threshold once the terms of EU exit are clear.
Businesses whose taxable turnover is close to the existing VAT registration threshold of £85,000.
The current thresholds will remain until 31 March 2022.
Whilst the Chancellor chose not to reduce the VAT registration threshold in the Budget, perhaps in part due to the backdrop of Making Tax Digital and Brexit, the concerns about the effect of the threshold distorting economic activity continue and a long-term solution will need to be considered in due course.
Head of Tax Policy & Indirect Tax Policy Lead