Fact Sheet: The Ups and Downs of the VAT Threshold
(Prepared October 2025, ahead of the Autumn Budget)
Why is VAT in the news?
With the Autumn Budget set for 26 November 2025, there’s speculation about possible changes to the VAT registration threshold (currently £90,000).
The truth: nothing has changed yet. Any reform would take time and require legislation.
Where the UK stands now
UK VAT threshold: £90,000 – one of the highest in the OECD.
Northern Ireland: Threshold cannot increase further without renegotiating the Windsor Framework.
Businesses often “bunch” just below the limit, restricting growth.
What could happen?
Threshold goes up
Fewer small businesses would need to register.
Some already-registered businesses could deregister.
But: Government would lose VAT revenue (costing £445m over 5 years last time it rose).
Threshold goes down
More businesses pulled into VAT.
Higher admin + compliance costs.
Likely price rises for consumers.
Could discourage new small businesses and side hustles.
No change (most likely)
The Chancellor may not address VAT at all.
What this means for you
Don’t panic – no changes happen overnight.
Be prepared – a lower threshold could mean earlier VAT registration for your business.
Stay flexible – higher or lower, there are cashflow and pricing impacts to consider.
What’s next
The Chancellor will announce the Autumn Budget on 26 November 2025.
We will provide updates immediately after the speech.
Live Q&A Session: Join me after the Budget to unpack what any changes mean for small businesses. Submit your questions here https://bit.ly/TBA_autumnbudget
Email hello@thebeautyaccountant.co.uk if you are looking for any guidance or support on VAT compliance for your beauty business.