- Key VAT Updates for 2025: As the UK prepares for 2025, several VAT rules will affect businesses, including a frozen registration threshold of £85,000 until March 2026, full enforcement of Making Tax Digital (MTD) with stricter penalties for non-compliance, and the continuation of the points-based penalty system for late VAT returns and payments.
- E-Commerce and Import VAT Adjustments: Post-Brexit, businesses can utilize Postponed VAT Accounting (PVA) to manage cash flow by deferring VAT payments on imports. Additionally, online marketplaces are required to ensure foreign sellers charge UK VAT to minimize tax evasion, highlighting the need for compliance in e-commerce transactions.
- Potential Political Reforms and Planning: With a general election expected by January 2025, businesses should remain vigilant for possible VAT reforms, such as adjustments to the VAT registration threshold or new reliefs. Proactive planning and monitoring of policy changes will be essential for maintaining compliance and optimizing financial strategies in the evolving VAT landscape.
Source Next Step Banking
