The announcement of the freezing of the VAT registration threshold for a further two years from April 2024 (until 2026) means that more small businesses and entrepreneurs will be sucked into the world of VAT. It means that the VAT threshold will not have moved for 9 years, leading to additional tax compliance costs for some entities that can ill afford those costs.

There is some welcome news relating to the VAT refund scheme for DIY housebuilders, as Government has announced that the system will be digitised which in theory at least, should make submitting claims easier in terms of invoices and paperwork. The deadlines for submitting claims will be extended from 3 months to 6 giving claimants more time to get everything in order prior to submission.

The Government has also announced extensions to VAT reliefs in the healthcare sector, with an extension to the zero rate provisions for prescriptions to encompass Patient Group Directions, and by extending the scope of the exemption relating to medical care services provided by persons under the supervision of healthcare professionals to now include pharmacists. These are logical decisions which aim to regularise the VAT position within the evolving healthcare sector and the way the NHS now operates, supporting the wider aims of taking pressure off GP services.

Overall nothing too exciting for VAT within this budget, although there are signs that changes are coming with consultations planned on VAT and financial services, and the scope of VAT on installations of energy saving materials.