Registration and deregistration thresholds/rates of VAT
The VAT registration and deregistration thresholds remain at £85,000 and £83,000 of taxable turnover respectively and will stay at these levels up to and including 2023/24.
The standard and reduced rates of VAT remain at 20% and 5%. A further reduced rate of VAT of 12.5% applies to certain supplies made in the hospitality and tourism sector between 1 October 2021 and 31 March 2022.
Second-hand motor vehicle export refund scheme
The Government will legislate to introduce a second-hand motor vehicle export refund scheme. Under such a scheme, businesses that remove used motor vehicles from Great Britain for resale in Northern Ireland or the EU may be able to claim a refund of VAT following export. This will ensure that Northern Ireland motor vehicle dealers will remain in a comparable position as those that are able to apply the VAT margin scheme elsewhere in the UK.
For the period until the export refund scheme is implemented, the Government will legislate, should a relevant agreement be reached with the EU, to extend the VAT margin scheme to apply in Northern Ireland on a limited basis in respect of motor vehicles sourced from Great Britain. The measure would apply retrospectively from 1 January 2021, and as a result, motor vehicles first registered in the United Kingdom prior to 1 January 2021 will be available to sell under the VAT margin scheme in Northern Ireland during that time period.
VAT exemption for dental prostheses imports
The Government will extend the current VAT exemption for dental prostheses supplied by registered dentists and other dental care professionals or dental technicians to imports of dental prostheses by these persons. This will ensure the VAT treatment for such prostheses supplied into and within the United Kingdom, including between Great Britain and Northern Ireland, is consistent.
VAT rules in free zones
The main VAT benefit to businesses authorised to sell goods in a free zone is that they can zero rate their supplies, and services carried out on goods in those zones may also be zero rated subject to conditions.
Measures to be introduced from 3 November 2021 will introduce an additional element to the VAT free zone model. They will ensure that where goods leave a free zone and there is no qualifying onward supply of the goods which meets the conditions, or where there is a breach of the rules of the free zone customs procedure, VAT will be due. It will prevent businesses, that might otherwise seek to locate in a free zone solely to avoid irrecoverable VAT, from gaining an unintended tax advantage and so helps maintain a level playing field for all.
VAT treatment of fund management fees
In the coming months, the Government will embark upon a consultation on options to simplify the VAT treatment of fund management fees.
Reform of penalties for late submission of VAT returns and late payment of tax
As previously announced, the new regime of penalties for VAT will come into effect for VAT taxpayers from periods starting on or after 1 April 2022.