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Overall there were no massive surprises or 'rabbits out of a hat' in George Osborne's Budget 2015.

In terms of VAT announcements, this was a very low key Budget. However, what may be surprising to many is the level of VAT receipts that HM Treasury expect to receive in comparison with other taxes. It is projected that total tax receipts in 2015/16 will amount to £667bn, with VAT accounting for £131bn (19.6%). This is only 2nd to Income Tax at £170bn (25.5%), with Corporation Tax as low at £42bn (6.3%). It is safe to say VAT is a significant revenue stream for HM Treasury.

We have summarised the VAT implications of Budget 2015 as follows:

Changes to registration and deregistration thresholds

The VAT registration and deregistration thresholds for UK businesses have been increased.

From 1 April 2015, the VAT registration threshold will increase by £1,000 to £82,000 and the VAT deregistration threshold will also increase by £1,000 to £80,000.

The VAT registration threshold for non-established businesses remains at £nil.

The increase in the thresholds is generally in line with inflation.

Deductions relating to foreign branches

The Government will amend the VAT Regulations to prevent businesses taking into account supplies made by foreign branches when calculating how much VAT incurred on overhead costs can be recovered by partly exempt businesses in the UK.

This measure is aimed to cover financial institutions such as banks and insurers with establishments both within and outside the UK.

Refunds for palliative care charities

As announced at Autumn Statement 2014, palliative care (i.e. hospice) charities will be eligible for VAT refunds with effect from 1 April 2015.

This measure is aimed to bring palliative care charities in line with the VAT refund scheme for NHS bodies (i.e. section 41 bodies).

Refunds for search and rescue charities

UK search and rescue and air ambulance charities will also similarly benefit to claim refunds on VAT they have incurred on their non-business activities.

This measure is aimed at specific search and rescue and air ambulance charities who were not receiving the same VAT recovery treatment as Government funded organisations

Refunds for medical courier charities

From 1 April 2015, medical courier charities (for example, blood bikes) will be included in the VAT refunds scheme as outlined above for search and rescue, and air ambulance charities.

This measure will introduce a new VAT refund scheme covering purchases made by such charities organisations for their non-business activities

Other Budget announcements

VAT and transport agency

Legislation will be introduced in Finance Bill 2015 to ensure that the organisation that is to replace the Highways Agency will be eligible for VAT refunds with effect from 1 April 2015.

VAT refunds for shared services

The Government intends to introduce legislation, in a future Finance Bill, for Non-Departmental Public Bodies to be included in the VAT refunds scheme from 1 April 2015.

Contact us

Should you wish further information on the above, please do not hesitate to contact Gary using the details outlined below.


Gary Moore
Direct line 0141 636 9353
Mobile 07812 061 582
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