VAT’s All Folks! A Year-End Look Back

The VAT Team
8 December 2025

As the year draws to a close, we’d like to wish you an enjoyable festive season. It’s also a great time to look back at some key VAT topics we’ve covered this year. A reminder of the practical updates, common pitfalls, and planning tips to ensure you are proactive in keeping your clients' business VAT-fit.

Taking Control of VAT Recovery
Closer reviews of VAT recovery positions can reduce irrecoverable VAT and support cleaner accounting. Tailored VAT recovery methods can reduce irrecoverable VAT and create a fairer approach for organisations with exempt or non-business activities.
Grants and Charity Funding
We highlighted the blurred line between grants and taxable income. Robust grant documentation and classification can protect your client from unexpected VAT liabilities and, in some cases, unlock recovery opportunities.
Partial Exemption & Non-Business Methods
Does one size fit all? We highlighted the need to check whether your clients current recovery method still reflects their activities accurately. Changes in funding, income mix, or operations can all impact the VAT position.
Capital Goods Scheme Threshold Set for Major Increase
After over three decades, the CGS threshold for property will rise from £250,000 to £600,000 in April 2026. While this will reduce administrative burdens for many, charities and partially exempt organisations could lose flexibility. Now is the time to urge clients to plan ahead and reassess property plans to consider transitional timing.
Down on Care Home Structuring
HMRC is challenging long-established care home VAT structures once protected under EU law. These arrangements, originally designed to mirror local authority VAT recovery, are now under scrutiny. If you have care providers clients using such structures, you should suggest they urgently review their position.

Whether you’re taking a well-earned break or preparing for a busy new year, we hope you enjoy the season. If you'd like to chat through any of the topics above or talk through VAT issues specific to your clients, we’re always here to help.