VAT rates and thresholds 

The annual taxable turnover threshold, which determines whether a person must be registered for VAT, will remain at £85,000 until 31 March 2024. The taxable turnover threshold which determines whether a person may apply for deregistration will remain at £83,000. The registration and deregistration limits for relevant acquisitions from EU Member States will also remain at £85,000, but only applies to businesses registered for VAT in Northern Ireland from 1 January 2021.

A person will have to apply for registration if, at the end of any month, the value of the taxable supplies made in the past 12 months or less has exceeded £85,000, or at any time there are reasonable grounds for believing that the value of the taxable supplies to be made in the next 30 days alone will exceed £85,000.

If at the end of any month, a person's taxable turnover in the past 12 months or less exceeds £85,000 but HMRC is satisfied that it will not exceed £83,000 in the next 12 months, that person will not have to be registered.

The standard rate of VAT remains at 20% and the reduced rate remains at 5%. 

The temporary reduced rate for the hospitality and tourism sector of 12.5% applies until 31 March 2022.

Implementation of VAT rules in free zones

An additional element will be added to the VAT free zone model for freeports with effect from 3 November 2021. This is a VAT exit charge for goods that have benefited from a zero-rated supply and where, after the goods leave the free- zone procedure, there is no onward taxable supply of the goods within a time limit. The legislation will:

• implement a free zone exit charge to ensure businesses do not gain an unintended tax advantage from the zero-rate in the free- zone model;
• make amendments to existing VAT law to ensure free -zone rules and warehousing rules are mutually exclusive; and
• amend some parts of historic free -zone legislation which are incompatible with the new free- zone VAT rules. 

VAT: exemption for dental prostheses imports

The current VAT exemption for dental prostheses supplied by registered dentists and other dental care professionals or dental technicians will be extended to imports of dental prostheses by these persons.

This will ensure the VAT treatment for such prostheses supplied into and within the UK, including between Great Britain and Northern Ireland, is consistent. This measure will apply retrospectively from 1 January 2021.

Northern Ireland second-hand margin scheme - interim arrangement

The VAT margin scheme will be extended to apply in Northern Ireland on a limited basis in respect of motor vehicles sourced from Great Britain for the period until the second-hand motor vehicle export refund scheme is implemented. As a result, motor vehicles first registered in the UK prior to 1 January 2021 will be available to sell under the VAT margin scheme in Northern Ireland during that time period.

This measure would take effect should a relevant agreement be reached with the EU and will apply retrospectively from 1 January 2021. It is expected to be replaced by the Second-hand motor vehicle export refund scheme when introduced.

Second-hand motor vehicle export refund scheme

The scheme will be made so that businesses that remove used motor vehicles from Great Britain for resale in Northern Ireland or the EU may be able to claim a refund of VAT following export.

This will ensure that Northern Ireland motor vehicle dealers will remain in a comparable position as those applying the VAT margin scheme elsewhere in the UK. Further details regarding the arrangements of the scheme will be provided in due course, including any regulations brought forward to give it effect.

VAT treatment of fund management fees

A consultation will be launched to consider the options to simplify the VAT treatment of fund management fees.