Value Added Tax

The current standard rate is 20% and 5% reduced rate on fuel and power.

Turnover Thresholds

From April 2012

Registration - last 12 months or next 30 days over


Deregistration - coming year under


Cash Accounting Threshold


Flat Rate Scheme Threshold


Annual Accounting Threshold



Registration threshold

If taxable turnover for VAT purposes in the previous 12 months exceeds the threshold.


VAT registration is compulsory if either of the following applies:

  •        VAT taxable turnover may go over the threshold in the next 30 days alone.
  •        When a VAT-registered business is taken over as a going concern.

Deregistration threshold

If VAT taxable turnover for the year is less than or equal to the deregistration theshold or it is expected to fall below it in the next 12 months, a business has the option of deregistering – if it wants to.

Cash Accounting Scheme
Businesses with an annual turnover of under £1,600,000 are eligible to calculate their
VAT under the Cash Accounting Scheme. Under this scheme a business accounts for
VAT on a receipts and payments basis as opposed to an invoice basis. This is aimed
to help cashflow for the smaller business so that VAT does not have to be paid to
HM Revenue & Customs prior to payment being received from the customer.


The information on this page is for guidance only. Professional advice should be obtained before acting on any information contained.