Registration and deregistration thresholds/rates of VAT
The VAT registration threshold is maintained at £85,000 for two years from 1 April 2022. The deregistration threshold will remain at £83,000 for the same period.
The standard and reduced rates of VAT remain at 20% and 5%, and a new interim rate of 12.5% will apply to hospitality, accommodation and specified attractions from 1 October 2021 as noted below.
Extension to reduced rate for hospitality, accommodation and attractions
The 5% temporary reduced rate of VAT on supplies of accommodation, food and beverage services excluding alcohol, and specified attractions is extended for a further six months from 1 April 2021 to 30 September 2021; this is followed by a 12.5% rate until 31 March 2022, after which the standard 20% rate will apply.
Extension of the window for starting deferred VAT payments through the VAT new payment scheme
As had previously been announced, the deadline for signing up to this scheme has been extended by three months to 30 June 2021 (21 June if applying online). At HMRC’s discretion, there may be a penalty of 5%, chargeable in relation to the amount of the deferred VAT that is outstanding, if a business has not either paid in full, opted into the new payment scheme or made an alternative arrangement to pay by 30 June 2021.
The final date by which a payment within the new payment scheme can be made has not been changed and remains as 31 January 2022.
Reform of VAT penalty regime
With effect from 1 April 2022, the penalty regime for VAT will be reformed (in line with that for income tax self-assessment).
There will be a new points-based late submission regime, where a financial penalty will only be issued when the relevant threshold is reached. A new late payment regime will introduce penalties proportionate to the amount of tax owed and how late payment is, and a new approach to interest charges and repayment interest will align VAT with other tax regimes.