VAT registration threshold reduction ahead?

17th November 2017

Last week the Office for Tax Simplification delivered a report on VAT to the government, which among other things, covered the potential impact of reducing the VAT registration threshold. The report recommended that the Chancellor should “examine the current approach to the level and design of the VAT registration threshold, with a view to setting out a future direction of travel for the threshold”.

The report specifically refers to the impact of two potential new thresholds, £20,000 and £43,000. Should Philip  Hammond decide to set the threshold at £20,000 the report estimates that up to 1.5 million businesses would be affected, raising up to £2 billion for the Exchequer.

Significantly, should this change happen, it would bring almost every business  within the scope of Making Tax Digital, which comes into force in April 2019.

We await next Wednesday’s budget to discover whether there will be any imminent changes!

OTS report link: Here

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