The new VAT threshold

The New VAT Threshold: What it Means for Your Cornish Business (and Your Bottom Line!)

Posted by: Tidal Bookkeeping | Date: May 25, 2025

Hello from sunny Cornwall! Here at Tidal Bookkeeping, we're always keeping a close eye on the financial landscape to ensure our local businesses are well-informed and prepared. Today, we're diving into a crucial update that could impact many of you: the new VAT registration threshold.

A Welcome Change: The New £90,000 VAT Threshold

As of April 1st, 2024, the UK VAT registration threshold officially increased from £85,000 to £90,000 in taxable turnover during any rolling 12-month period. This is the first increase since 2017 and is a welcome change for many small businesses across the UK, including our fantastic Cornish enterprises.

What does this mean for your business?

 * For businesses currently below £90,000 turnover: If your taxable turnover was previously between £85,000 and £90,000, you are no longer legally required to be VAT registered. This could mean significant savings in administration time and compliance costs.

 * For businesses approaching the threshold: If your turnover is nearing £90,000, you now have a little more breathing room before VAT registration becomes compulsory. This allows for more strategic planning and growth without immediately facing the complexities of VAT.

 * Deregistration opportunity: The deregistration threshold has also risen from £83,000 to £88,000. If your taxable turnover has dropped below £88,000, you might now be eligible to deregister from VAT, further reducing your administrative burden.

Why the Change?

The government introduced this change to help ease the burden on small businesses, particularly those who were being pulled into VAT registration simply due to inflation. It's designed to reduce compliance costs and free up businesses to focus on growth.

Is Deregistration Always the Best Option?

While the new threshold offers relief for many, it's important to remember that deregistering isn't always the right move for every business. Consider these points:

 * Loss of VAT reclaim: If you deregister, you can no longer reclaim VAT on your business expenses. If you have significant VAT-able purchases, this could impact your profitability.

 * Impact on B2B sales: If a large portion of your clients are VAT-registered businesses, they might prefer to work with VAT-registered suppliers as they can reclaim the VAT on your services. Deregistering could make your pricing appear less competitive in this scenario.

 * Perception: For some, being VAT registered lends a certain air of professionalism and establishment to a business.

Navigating the New Threshold with Confidence

Understanding the nuances of VAT and how this new threshold impacts your specific business can be complex. That's where we come in!

At [Your Cornish Bookkeeping Firm Name], we offer:

 * Expert VAT advice: We'll help you determine if you need to register, if deregistering is beneficial, or if voluntarily registering makes sense for your business.

 * Hassle-free VAT returns: If you are (or become) VAT registered, we can handle the preparation and submission of your VAT returns, ensuring compliance and accuracy.

 * Strategic financial planning: We'll work with you to understand your financial goals and ensure your VAT status aligns with your overall business strategy.

Don't let changes in tax regulations leave you feeling adrift in the Cornish mist! Get in touch with us today for a friendly chat and let's make sure your business is thriving.

Contact us for a free consultation to discuss your VAT needs!

01209 702920 | info@tidalbookkeepingcornwall.co.uk | www.tidalbookkeeping.co.uk

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