Value Added Tax
Registration thresholds
The registration threshold for VAT rises from £73,000 to £77,000 on 1 April 2012. The deregistration threshold rises from £71,000 to £75,000 on the same date. Self-assessment returns for businesses can use ‘three-line accounts’ if they are below the registration threshold.
Rates and scope
The standard rate of VAT will remain unchanged at 20% and the lower rate at 5%. The Chancellor announced a number of detailed changes in the scope of the tax to deal with matters that have led to many disputes in the courts. The changes will remove an arguable borderline and give the victory to the taxman – all the following become chargeable to VAT at the standard rate from 1 October 2012:
- Food which is hot at the point of sale, regardless of the reason for heating it
- Sports drinks which are intended for nutrition rather than slaking the thirst
- Rental of self-storage facilities
- Rental of a ‘chair’ by a hairdresser’s salon to a hairdresser
- Some types of holiday caravan which have been treated as zero-rated
- Some supplies of reconstructed protected buildings which have been treated as zero-rated.
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 2012. 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 which is available on the HMRC website.