VAT, Excise and Other Duties

VAT thresholds

The VAT registration limits increase, in line with inflation, with effect from 1 April 2004 as follows:

  • the threshold for compulsory registration is £58,000
  • the threshold for voluntary deregistration is £56,000.

Annual accounting scheme

The annual taxable turnover limits for joining and remaining in the scheme are increasing in line with inflation. With effect from 1 April 2004 the limits will be £660,000 to join the scheme and £825,000 to remain in the scheme.
Comment

There is normally a requirement for businesses to be registered for 12 months prior to joining the scheme. Note that the ability for businesses with taxable turnover of up to £150,000 to join the scheme immediately is not changed.


Cash accounting scheme

The turnover limits for the cash accounting scheme will also increase in line with inflation to £660,000 to join the scheme and £825,000 to stay in the scheme. These limits come into effect on 1 April 2004.

There is also a new measure to allow outstanding VAT to be accounted for on a cash basis for a further six months after leaving the scheme.

VAT anti-avoidance measures

  • New disclosure rules are to be introduced for certain businesses using specific avoidance schemes.
  • Measures come into effect from 18 March 2004 to block a complex avoidance scheme which uses a Special Purpose Vehicle to avoid VAT on commercial buildings.
  • In a few cases there will be two new tests applying from 1 August 2004 for eligibility for VAT grouping.

Alcoholic drinks

The excise duty on spirits, cider and sparkling wine is frozen. The duty on beer and still wine is increased in line with inflation, adding 1p to a pint of beer and to a standard 175ml glass of wine. The new rates come into effect from midnight on 21 March 2004.

The reduced rate scheme for small breweries continues. Improvements are being made to the scheme which come into effect on 1 June 2004. New measures for stamping retail containers of spirits and certain wines are coming into effect from Royal Assent.

Tobacco products

Tobacco duties are increased in line with inflation with effect from 6pm on 17 March 2004.

Vehicle Excise Duty (VED)

VED rates have been frozen for all cars, vans, lorries and motorcycles.