In the recent Spring Budget 2024, a significant change has been announced to the VAT registration threshold which will provide a boost for small businesses.
From 1 April 2024, the VAT registration threshold will increase from £85,000 to £90,000. This adjustment signifies the first change to the threshold since it was frozen as of 1 April 2017.
Simultaneously, the taxable turnover threshold which determines whether a person may apply for deregistration will rise from £83,000 to £88,000.
The Chancellor said this would “reduce the administrative and financial impact” for SMEs, explaining it will bring approximately 28,000 small businesses out of collecting, reporting and paying VAT altogether.
To navigate these changes effectively, businesses are advised to:
- Stay Informed: Regularly monitor official updates from HMRC and other relevant authorities to ensure compliance with the latest regulations.
- Review Financial Structures: Evaluate the impact of the revised VAT registration threshold on your business’s financial structure. Consider consulting with financial experts to make informed decisions.
- Update Systems: If applicable, update financial systems and software to accommodate changes in VAT registration and reporting requirements.
- Plan Ahead: Implement proactive financial planning strategies to mitigate potential disruptions and ensure the continued smooth operation of your business.
Author: Emma Hardwick, Senior Business Services Manager
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Date published: 13 March 2024