The Autumn 2025 Budget introduced several updates to the VAT system that will matter to many UK businesses. Some are helpful, some require attention, and all are worth understanding early. Below is a clear, client-focused overview that keeps things simple and practical.
At Friendly Assist Accountancy, we combine local expertise with extensive international experience. Whether your business trades solely in the UK or operates across borders, we ensure your VAT processes are compliant, efficient and protected from unnecessary penalties.
VAT Relief on Goods Donated to Charity
Starting 1 April 2026, businesses will be able to donate goods to registered charities without triggering a VAT charge. The relief applies to standard goods worth up to £100 each and essential electrical items worth up to £200 each.
This is good news for businesses clearing out surplus stock, retired equipment or unused office items. Instead of disposing of them or worrying about VAT consequences, donating could now be both cost-effective and beneficial for the community.
If your business regularly manages stock or equipment refreshes, this is an opportunity to plan ahead and make charitable giving easier and more tax-efficient.
VAT Penalties: Why Compliance Really Matters
It is also important to keep an eye on VAT compliance because HMRC penalties can accumulate quickly. Here is how the current system works.
Late submission penalties follow a points-based regime. Each late VAT return earns one penalty point. Once you hit your threshold for late submissions (two points for annual filers, four for quarterly and five for monthly), HMRC charges a £200 penalty. Every late return after crossing that threshold brings another £200 penalty.
Late payments come with their own penalty structure. There is no penalty in the first 15 days after the payment deadline, but after this point charges begin. If VAT remains unpaid after 30 days, the penalties and interest charges increase and can become expensive if not addressed quickly.
Submitting inaccurate VAT returns can also lead to penalties. The amount depends on whether HMRC views the error as careless, deliberate or concealed. Failing to register for VAT when required may trigger penalties up to 100 percent of the VAT owed.
Friendly Assist has worked with businesses across multiple countries, tax regimes and compliance systems. We understand how to keep VAT submissions accurate and timely, no matter how complex your operations are.
Private Hire Vehicles, Taxis and Motability
The Budget also included updates affecting the transport sector, especially suppliers of private hire vehicle services, taxi services and motability arrangements. HMRC is tightening VAT rules in this area, and businesses should expect more consistent treatment going forward. If your business operates in this sector, or relies on these services regularly, we can help you understand what these changes may mean for your costs and reporting.
Moving Toward Digital VAT Administration
The government continues to push for greater adoption of digital VAT processes, including e-invoicing. While not all requirements are in place yet, it is a good moment to check whether your current systems are ready for a more digital future.
If your business still uses paper invoices or manual VAT calculations, Friendly Assist can help you modernise your systems in a practical and cost-effective way.
Cross-Border and Group VAT Changes
If your business includes overseas branches or operates as part of a group with international connections, you may be affected by the government’s revision of VAT grouping rules.
For many cross-border businesses, these changes simplify VAT accounting between UK and overseas branches. At Friendly Assist, our international expertise allows us to review your structure and ensure you benefit from any simplifications while staying fully compliant.
What You Should Do Next
Here are a few simple steps that will help most businesses stay ahead of these changes.
- Plan ahead if you expect to donate goods or equipment next year.
- Ensure VAT deadlines are recorded, automated or managed professionally to avoid penalties.
- Review your invoicing and VAT systems to prepare for digital reporting requirements.
- If you operate overseas, in a group structure or in a sector affected by the new rules, ask us to review your VAT setup.
Friendly Assist Accountancy is here to support your business with both UK and international VAT expertise. If you are unsure how any of these updates affect you, we are always happy to help.
The VAT Changes Every Business Should Know in 2025 – And How Friendly Assist Accountancy Helps You Stay Ahead
The Autumn 2025 Budget introduced several updates to the VAT system that will matter to many UK businesses. Some changes are helpful, some require attention, and all are worth understanding early. This post breaks down what you need to know in a straightforward, client-focused way.
At Friendly Assist Accountancy, we combine UK expertise with extensive international experience. Whether your business trades solely in the UK or operates across borders, we ensure your VAT processes are compliant, efficient and protected from unnecessary penalties.
VAT Relief on Goods Donated to Charity
From 1 April 2026, businesses will be able to donate goods to registered charities without triggering a VAT charge. The relief applies to:
• Goods worth up to £100 each
• Essential electrical items worth up to £200 each
This is a positive step for businesses that often deal with surplus stock or retiring office equipment. Instead of discarding items or worrying about VAT implications, donating them becomes a tax-efficient and socially beneficial option.
Businesses that regularly refresh stock or equipment may want to plan ahead to take advantage of this new relief.
VAT Penalties: Why Staying Compliant Matters
VAT compliance remains an important area to stay on top of, as HMRC penalties can accumulate quickly.
Late VAT Returns
The points-based system means each late return earns one penalty point. Once you reach your threshold (two points for annual filers, four for quarterly, five for monthly), HMRC issues a £200 penalty. Every late submission after that results in another £200 fine.
Late VAT Payments
There is no penalty in the first 15 days after a missed payment deadline. After this, penalties and interest begin to build, and charges increase if the VAT remains unpaid beyond 30 days.
Inaccurate VAT Returns
Incorrect VAT returns can lead to penalties depending on whether HMRC views the error as careless, deliberate or concealed. Failing to register for VAT when required can trigger penalties of up to 100 percent of the VAT owed.
Friendly Assist Accountancy has supported businesses across multiple countries and tax regimes. This international expertise helps ensure accurate, timely VAT submissions, no matter how complex your operations are.
Updates Affecting Taxis, Private Hire Vehicles and Motability
The Budget also includes changes impacting private hire vehicle operators, taxi services and motability arrangements. HMRC is tightening VAT rules in these areas, and suppliers should expect more consistent treatment going forward.
If your business operates in or regularly uses these services, we can help you understand the practical impact of these updates.
A Push Toward Digital VAT Systems
The government continues to move towards digital VAT processes, including e-invoicing and automated reporting. While these requirements are still being rolled out, now is a good time to check whether your invoicing system is prepared.
If you are still using paper or manually prepared invoices, Friendly Assist can help you transition smoothly to digital processes.
Cross-Border and VAT Group Changes
Businesses with overseas branches or group structures may be affected by revised VAT grouping rules. For many cross-border organisations, the changes simplify how VAT is accounted for between UK and international branches.
Our international expertise ensures you benefit from the simplifications while staying fully compliant with UK and overseas tax authorities.
What You Should Do Next
Here are steps most businesses can take to stay ahead:
- Plan any future donations of stock or equipment to take advantage of the new VAT relief.
- Put systems in place to ensure VAT filing and payment deadlines are never missed.
- Review your invoicing and VAT processes to prepare for digital requirements.
- If your business operates internationally or within a group structure, request a VAT review to ensure compliance with the new rules.
Friendly Assist Accountancy is here to support your business through every VAT change, whether local or international. If you would like help reviewing your VAT setup or planning ahead, our team is ready to assist.
National Audit Office (NAO) – Reports on HMRC performance and VAT administration: www.nao.org.uk
Joseph Rowntree Foundation (JRF) – Research on how tax and VAT changes affect households and small businesses: www.jrf.org.uk
Financial Times (FT) – Coverage and analysis of VAT policy, Budget updates and business impacts: www.ft.com
Confederation of British Industry (CBI) – Business perspectives on VAT reforms and regulatory changes: www.cbi.org.uk