It has been confirmed that the taxable turnover threshold, that determines whether businesses should be registered for VAT, will be frozen at £85,000 until 31 March 2022. The taxable turnover threshold that determines whether businesses can apply for deregistration will also be frozen at the current rate of £83,000 for the same time period.
Businesses are required to register for VAT if they meet either of the following two conditions:
- At the end of any month, the value of the taxable supplies made in the past 12 months or less has exceeded £85,000; or
- At any time, there are reasonable grounds for believing that the value of taxable supplies to be made in the next 30 days alone will exceed £85,000.
In other VAT related Budget news, the Chancellor confirmed that from 1 January 2021 there will be no VAT whatsoever on women’s sanitary products. This will be put in place by the introduction of a new zero rate of VAT for women’s sanitary products, a move that would not have been possible whilst the UK was part of the EU.
In addition, a zero rate of VAT will apply to all e-books from 1 December 2020. This will mean that all e-books, e-newspapers, e-magazines and academic e-journals will have the same VAT treatment as their physical counterparts.