Value Added Tax
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Value Added Tax

Value Added Tax

Registration thresholds


The registration threshold for VAT rises from £79,000 to £81,000 on 1 April 2014. The deregistration threshold rises from £77,000 to £79,000 on the same date.


Car fuel


The values to be used by a business which supplies road fuel to a proprietor, director or employee for private use change with effect for return periods starting on or after 1 May 2014. Although the scale rates are based on CO2 emissions, they are not based on a percentage calculation as the income tax benefit charges are: it is necessary to look up the exact figure in a table on the HMRC website (search for ‘vat fuel scale rates’). The charge rises from a minimum on ratings up to 120g/km to the maximum for 225g/km or more.


Prompt payment discounts


Discounts for prompt payment are normally offered by businesses to other businesses. Under UK VAT law, VAT is calculated on the discounted invoice amount, even if the customer does not take up the discount. Because the customer can usually deduct input tax on expenditure, this does not lead to an overall loss of VAT. HMRC have noticed increasing use of prompt payment discounts being offered to consumers, who would not be able to recover VAT. At the same time, doubts have been raised over whether the UK’s rule complies with EU VAT law. The rule will therefore be changed so that VAT will be due on the consideration actually received. This will require extra paperwork where the customer is a VAT-registered business which needs a VAT invoice showing the deductible amount. The change will take effect from 1 May 2014 for telecommunication and broadcasting services supplied to consumers; it will take effect for all supplies from 1 April 2015.