Budget 2016: Changes to VAT registration and related thresholds

The threshold for VAT registration is currently £82,000. The threshold for VAT deregistration is currently £80,000.

From 1 April 2016, these thresholds will be amended as follows.

  1. Increase the VAT registration threshold in line with inflation to £83,000.
  2. Increase the VAT deregistration threshold in line with inflation to £81,000.
  3. Increase the registration and deregistration threshold for EU acquisitions, in line with the VAT registration threshold.
  4. Raise the turnover limit for Income Tax self-assessment ‘3 line accounts’ to align with the VAT registration threshold.
  5. Increase the entry and exit thresholds for the Income Tax cash basis accounting in line with the VAT registration threshold.

The government states that increasing these thresholds will prevent around 2,000 small businesses from having to register for VAT by the end of the 2016 to 2017 financial year.