Budget Summary 2015/16

Value Added Tax

Registration thresholds

The registration threshold for VAT rises from 81,000 to 82,000 on 1 April 2015. The deregistration threshold rises from 79,000 to 80,000 on the same date. Self assessment returns for businesses can use 'three-line accounts' if they are below the registration threshold.

Prompt payment discounts

Discounts for prompt payment are normally offered by businesses to other businesses. UK law has up to now required VAT calculations to assume that the customer took up the discount so VAT on 100 would be 20% of 97, if a 3% discount was offered. In a surprise announcement last year, the Chancellor withdrew this rule for all supplies from 1 April 2015. HMRC carried out a consultation and accepted that this would cause significant problems for businesses, but implementation has not been delayed. Any business that either offers or takes up such discounts will need to make sure that it has considered the changes necessary to comply with the new law before April.

Tax Tip
This makes the paperwork much more complex be prepared

Recovery by charities

Charities cannot normally recover VAT incurred on their expenditure in relation to their non-business activities (e.g. carrying out their charitable objects for no consideration). A new relief will enable medical courier charities to reclaim the VAT they incur on goods and services purchased for these activities from 1 April 2015. This is added to the Autumn Statement announcement of a similar relief for charities supplying palliative care.