HMRC Policy paper: Budget 2025 document

Summary of VAT related points

✅ 1. Tour Operators’ Margin Scheme (TOMS) Reform

• Legislation will exclude private hire vehicle and taxi journeys from TOMS from 2 January 2026, except where ancillary to a wider travel package.
• Purpose: Prevent ride-sharing apps from exploiting TOMS to pay VAT only on margins instead of full fares.

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✅ 2. VAT Relief for Business Donations to Charities

• From 1 April 2026, businesses donating eligible goods to registered charities will not need to account for VAT on those items.
• Applies to goods for onward distribution to people in need or for use in charity services.
• Value limits and exclusions (e.g., excise goods) will apply.

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✅ 3. Combined County Authorities VAT Refunds

• Combined County Authorities (CCAs) created under the Levelling Up and Regeneration Act 2023 will be added to the list of bodies eligible for VAT refunds under section 33 of the VAT Act 1994.
• Effective from Royal Assent of Finance Bill 2025-26, covering purchases from 1 December 2025.

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✅ 4. Mandatory E-Invoicing for VAT

• Mandatory electronic invoicing for all VAT invoices by 2029.
• Goal: Improve compliance, reduce late payments, and modernize VAT reporting.
• Government will set interoperable standards and provide guidance before rollout.

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✅ 5. Removal of Customs Duty Relief for Low-Value Imports

• Budget confirms reform of customs treatment for low-value imports, removing relief that gave online retailers an advantage.
• Linked to VAT compliance for cross-border e-commerce.

Source gov.uk

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