Unfortunately the Chancellor did not announce any new VAT reliefs or incentives today in his budget; but there were a few relevant announcements:
- The VAT registration threshold will increase from £83,000 to £85,000 from 1 April 2017 and at the same time the de-registration threshold will increase from £81,000 to £83,000.
- The government is providing an extra year (until April 2019) before making tax digital is mandated for unincorporated businesses and landlords below the VAT threshold to provide them with more time to prepare for digital record keeping and quarterly updates.
- The VAT ‘use and enjoyment’ provisions for B2C consumer mobile phone services to individuals to remove the inconsistency that applies currently where UK VAT is applied to mobile phone use by UK residents when in the EU, but not when outside the EU.
- There will be a consultation on options to combat missing trader fraud in relation to labour in the construction sector, in particular where applying the reverse charge mechanism so that the recipient accounts for VAT. [Not especially clear in the Budget Documentation; but possibly referring to making Employing Contractors responsible for the VAT accounting for sub-contractors – as we have seen before with CIS & income tax]
- The government are intending to introduce a ‘Split Payment’ model to help prevent abuse by overseas traders when selling to UK consumers online. It will basically mean that VAT is collected directly by the Exchequer from online transactions at the point of purchase, reducing the non-payment of VAT by some overseas traders.
In relation to the NHS, they have announced that £2bn of additional funding will be made available to councils between 2017-2020 to help ensure people receive the social care support needed and to reduce pressure on the NHS. Also a further £425m will be invested to improve local NHS services and support improvement in A&E; £325m of this will be made available to the first STPs [Sustainability and Transformation Plans] to progress.
Interestingly, the government announced that they are expecting a drop in the estimate for revenue raised via the soft drinks levy (a tax on sugary drinks) as a result of suppliers already reducing the sugar content of their products. Perhaps this will, indirectly, overtime have a positive effect on the NHS spend on treating obesity and other chronic diseases like Type 2 diabetes.