VAT Rates for 2020/21

Standard Rate – 20%

Reduced Rate – 5%

VAT Thresholds

If annual turnover is less than –

£85,000 from 01/04/20 – registration not necessary

£83,000 from 01/04/20 – de-registration possible

It was announced in the Autumn Budget 2017 that the current deregistration threshold of £83,000 will be maintained for the next two years. During that time the government will consult on the design of the registration and deregistration threshold.

When to deregister or choose to deregister.

VAT registered persons who cease to trade, cease to make taxable supplies, sell their business, or change business entity (e.g. incorporate a sole trade), may be obliged to deregister for VAT.
A business must notify HMRC within 30 days if mandatorily deregistering, or face potential penalties
A business can deregister voluntarily if making taxable supplies of £83,000 or less per annum.
A business can deregister if they expect to make taxable supplies of less than £83,000 over the next 12 months.
A business that deregisters will complete a Final VAT Return and may be required to pay VAT to HMRC on the value of its stocks and assets held.

£1,350,000 – eligible to use the Cash Accounting Scheme

£1,350,000 – eligible to use the Annual Accounting Scheme

£150,000 – eligible to use the Flat Rate Scheme

(The FRS is available to businesses with a taxable turnover, excluding VAT of up to £150,000).
If you become ineligible to use the scheme because your total income (including VAT) in the year then ending is more than £230,000, and you operate quarterly VAT then you must leave the scheme at the end of the VAT period containing your anniversary.