Unsurprisingly, there were no significant measures announced on VAT. The Conservative’s manifesto pledge not to raise VAT rates limited the scope to use this as a tax raising measure and to do so at this time would also not help to ease inflationary pressures. A VAT rate cut was never on the cards as it would be too costly and unlikely to be viewed currently as fiscally prudent.
It was announced that the VAT registration and deregistration thresholds will not change for a further period of 2 years from 1 April 2024 up to 31 March 2026. At £85,000, the UK’s VAT registration threshold is more than twice as high as the EU and OECD averages.
An announcement had been made earlier in the year to cancel the proposed reintroduction of the VAT free scheme for shopping (retail exporters scheme), for overseas visitors to Great Britain. This decision has been maintained due to costs of implementing. However, it does still apply in Northern Ireland due to the Northern Ireland Protocol.
Other Indirect Tax Measures:
Customs Tariff Suspensions
Following applications from business stakeholders, this measure will remove tariffs on over 100 goods for two years to help put downward pressure on costs for UK producers.
The measure will remove tariffs as high as 18% on goods ranging from aluminium frames used by UK bicycle manufacturers to ingredients used by UK food producers. Further details are awaited on this measure, however, it should be noted that the implications for Northern Ireland businesses may be different as it operates under the Northern Ireland Protocol and therefore subject to EU tariff rules on goods imported into Northern Ireland that are “at risk” of moving into the EU.
Northern Ireland Trade & Investment Event
Northern Ireland business groups have since Brexit been pushing for a major investment event to promote doing business in Northern Ireland and to highlight the benefits of its unique access to trade into both the EU and the UK markets under the terms of the Northern Ireland Protocol. It is therefore welcome that the Government have announced in the Autumn Statement that they are providing up to £2 million for the Department for International Trade to work with local partners including Invest NI to host a trade and investment event in Northern Ireland in 2023.
This will showcase Northern Ireland as an attractive and vibrant place to do business and help drive new mobile investment into its economy. An agreement between the UK and EU on the workings of the Northern Ireland Protocol in the early part of 2023 would therefore be very welcome by businesses and the investment event could be very timely in promoting Northern Ireland as an excellent place to invest if agreement could be reached.
The freeze to rates has been cancelled in today’s announcement.
Get in touch
If you have any questions on the indirect tax measures announced in the Autumn Statement, please contact Frankie Devlin of our Tax team. We'd be delighted to hear from you.
Partner, Indirect Taxes – VAT & Customs
KPMG in Northern Ireland