New VAT Changes for 2025: What Small Business Owners Should Watch
VAT might not be your favourite subject — but missing these updates could cost you.
Key Changes You Should Know
– Capital Goods Scheme update — expensive computers will be removed from the scheme (no date yet)
– Threshold for land and buildings — raised from £250,000 to £600,000 for VAT adjustments
– Charitable donations — consultation underway to simplify VAT relief on business-donated goods
Why It Matters
If you buy expensive kit — or work in construction or property — these changes could make your VAT adjustments simpler.
If you’re involved with charities (think local fundraising, donated stock), the VAT relief changes could affect what’s tax-deductible and what’s not.
Common Mistakes
– Not tracking asset use over time (capital adjustments catch many businesses out)
– Assuming VAT rules for business donations are simple (they’re not — and HMRC is watching)
Rochdale Example
A small business in Bury recently had a VAT review because they donated leftover stock to charity but didn’t apply the correct VAT treatment. Easy mistake. Easy fine.
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