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VAT Threshold Increases To £70,000 In Budget

For small businesses that are hovering close to the threshold for having to register for VAT, it can be a troubling time.  Many of them would prefer not to join if at all possible, particularly because of the increase in paperwork that is involved.

I always pay close attention to the changes announced in any Budget, because they have an obvious effect on my business.  The announcement this time that the Chancellor has put the threshold up by £2,000 to £70,000 will certainly help some smaller businesses to remain free of VAT for a while longer.  However on the flip side of this the figure at which deregistration from VAT can be achieved has also increased, to £68,000.

Of course some businesses register for VAT anyway, regardless of how much they may be turning over.  There are good reasons for doing this in some situations, but it doesn’t suit everyone.  I think the higher threshold will take some of the pressure off UK businesses who are very close to going over the threshold though.  With the recession still fresh in our minds many of those businesses need to get back to basics, without having to worry about a whole new ball game like this.

My one concern is whether a new government would reverse or alter these changes, although I cannot see that happening in this particular situation.  The additional £2,000 will not affect too many businesses but for those who were on the brink of passing the previous £68,000 threshold the additional cushion will enable them to breathe a sigh of relief.

If you are approaching the new threshold now, or you think you will be in the near future, contact St Matthew for further information on what you should do next.


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