. What is VAT Threshold?

The VAT (Value Added Tax) threshold is the annual turnover amount at which a business must register for VAT. Previously set at £85,000, the threshold’s increase to £90,000 allows for a little more flexibility for small and medium-sized enterprises.

Impact on Your Business

A. Potential Savings for Smaller Businesses If your business’s annual turnover is below the new £90,000 threshold, you are no longer required to register for VAT. This could mean savings on administrative costs and reduced complexity in your financial processes.

B. Time to Review Your Pricing Strategy For businesses hovering around the threshold, this adjustment is a great time to review your pricing strategy. You might find new opportunities to invest in growth without the immediate concern of hitting the previous VAT registration limit. It may be that if you are happy with the current size that growth is no longer the primary aim.

C. Strategic Planning for Growth If your turnover is close to or exceeds £90,000, it’s crucial to plan for the implications of VAT registration. This includes setting aside funds for VAT payments and potentially adjusting your prices to accommodate VAT charges.


Compliance and Responsibilities

A. Monitoring Your Turnover Even if you currently fall below the threshold, it’s essential to monitor your turnover closely. If you expect to surpass the £90,000 limit in a 12-month period, you must register for VAT promptly to avoid penalties.

B. Accurate Record-Keeping Maintain precise financial records to track your turnover accurately. This practice not only ensures compliance but also helps in making informed business decisions.

C. VAT Invoicing and Returns Once registered, ensure your invoicing system is updated to include VAT details. Additionally, you’ll need to submit regular VAT returns, detailing the amount of VAT you’ve charged and paid.

4. Professional Guidance

Navigating VAT regulations can be complex, especially with changes in thresholds. Seeking advice from accountancy professionals can provide clarity and ensure your business remains compliant. Our team is here to help you understand the new VAT threshold’s impact on your business and assist with any necessary adjustments.


The increase of the VAT threshold to £90,000 is a significant change for many businesses. It offers a chance to reassess your financial strategies and ensure compliance with updated regulations. Whether you’re just below the threshold or exceeding it, understanding these changes is crucial for your business’s success. Reach out to us today to discuss how we can support you through this transition.