VAT Changes in Wales: What You Need to Know

Aug 26

3 min read

Updated: 6 days ago

Understanding the Recent VAT Changes

The summer of 2026 has seen significant updates to VAT regulations. These changes will impact businesses across Wales. It's crucial to understand these updates to ensure compliance and effective planning.

Higher Thresholds for the Capital Goods Scheme

From Wednesday, 29th July 2026, the threshold for land, buildings, and civil engineering works has increased from £250,000 to £600,000. This means fewer projects will fall into the scheme. Consequently, this should simplify VAT adjustments for many businesses. Additionally, computers and computer equipment have been removed from the scheme entirely.

If you invested in qualifying assets before 29th July, the old £250,000 threshold still applies to that project. This transition rule is important for anyone who has made recent improvements to premises or infrastructure.

Digitisation of the Option to Tax

HMRC will launch a new online portal for option to tax matters before the end of 2026. Businesses will be able to submit elections, revocations, and related information digitally. This change should make the process faster and reduce paperwork.

Temporary VAT Cut on Children’s Activities

Running from 25 June to 1 September 2026, the temporary summer VAT cut reduces VAT from 20 percent to 5 percent on a wide range of children’s and family activities. This includes admission to attractions such as museums, zoos, adventure parks, fairs, and soft play centres. Children’s meals eaten on the premises are also included. Adult tickets qualify too, provided the attraction offers a package family ticket that includes one child. However, takeaway meals do not qualify. Businesses can choose whether to pass the saving on to customers, although the Government expects most to do so.

Consultation on Social Housing Land Sales

HMRC is consulting on a targeted zero-rate for the sale of land to registered social housing providers. The aim is to simplify arrangements and support earlier-stage development. This will be relevant to property developers, housing associations, and landowners.

E-Invoicing and Future Digital Requirements

Although not immediate, HMRC has confirmed that the UK will adopt the Peppol network for e-invoicing from 1st January 2029. This is part of a broader move towards digital reporting and greater transparency. Businesses should begin reviewing their accounting systems and supply chains to ensure they can adapt smoothly.

What This Means for Welsh Businesses

These changes are part of a broader shift towards digital compliance and simpler VAT administration.

Key Actions for Businesses

For most businesses, the key actions over the coming months will be:

Review capital projects to check whether the new thresholds affect your VAT adjustments.
Prepare for digital processes by ensuring your accounting software is up to date.
Update pricing if you offer qualifying children’s activities or meals.
Monitor HMRC consultations if you operate in property or development.
Plan for e-invoicing to avoid last-minute system changes.

Staying Informed

It's essential to stay informed about these changes. Regularly check for updates from HMRC and other relevant sources. This will help you remain compliant and make informed decisions for your business.