Autumn Budget 2021: VAT

The Chancellor made the following new announcements in respect of VAT in his Autumn Budget 2021.

Exemption for dental prostheses

Backdated to 1 January 2021

• A VAT exemption will be introduced for imports of dental prostheses by registered dentists and other dental care professionals or dental technicians.

Free zones

From 3 November 2021, VAT legislation in free zones will:

• Implement a free zone exit charge to prevent unintended tax advantages.
• Ensure free zone rules and warehousing rules are mutually exclusive.
• Amend existing legislation incompatible with the new free zone VAT rules.

Second-hand Motor Vehicle Export Refund Scheme

From Royal Assent in 2022

• A second-hand Motor Vehicle Export Refund Scheme will be introduced for businesses that remove used motor vehicles from Great Britain for resale in Northern Ireland or the EU, allowing them to claim a refund of VAT following export.

VAT second-hand margin scheme: Northern Ireland 

Backdated to 1 January 2021

• The VAT second-hand margin scheme will be extended to apply in Northern Ireland on a limited basis in respect of motor vehicles sourced from Great Britain. This will apply for vehicles registered prior to 1 January 2021 until the Second-hand Motor Vehicle Export Refund Scheme (above) is implemented.

Consultation: VAT treatment of fund management fees

•  A new consultation will be opened on the simplification of VAT treatment of fund management fees.

Useful guides on this topic

Autumn Budget 2021: At a glance
A summary of key budget announcements together with items published without announcement.

Margin scheme
The VAT margin scheme allows businesses to calculate their output VAT liability on the profit margin they make on the goods they sell.