National Statistics

Quarterly VAT statistics commentary (January to March 2021)

Updated 18 June 2021

Released: 30 April 2021.

UK Quarterly VAT Statistics updated with January to March 2021 provisional data

Receipts

All figures published in this bulletin should be read in the context of the coronavirus (COVID-19) pandemic and the government’s VAT deferral measure, where traders were able to defer VAT payments between 20 March and 30 June 2020.

Businesses were required either to repay the full amount by 31 March 2021 or, alternatively, opt in to the VAT deferral new payment scheme. The VAT deferral new payment scheme is open for registration between 23 February 2021 and 21 June 2021 and allows businesses to spread their payments with 2 to 11 equal monthly instalments, interest free.

Headlines

The following headlines refer to the latest quarter (January 2021 to March 2021):

• Total VAT receipts this quarter were £38,825 million, which is 33.1% higher than the same quarter last financial year

• Net Home VAT receipts for this quarter were £32,851 million, which is £11,138 million (51.3%) higher than the same quarter last financial year

• Import VAT receipts this quarter were £5,974 million, which is 19.9% lower than the same quarter last financial year

VAT receipts for the current quarter (January 2021 to March 2021) were substantially higher than for the same quater last year. This is mainly due to VAT deferral. In March 2020 a large quantity of VAT was deferred to be paid later, whereas between January 2021 and March 2021 a substantial amount of deferred VAT was repaid (in addition to regular VAT payments).

Chart 1: Receipts for Net Home VAT, Import VAT and Total VAT for the past 10 financial years

The graph is plotted in quarters with Q1 referring to the first quarter of the financial year. Hence, 2020 Q1 refers to the months between April 2020 and June 2020.

For the full dataset that accompanies Chart 1 go to Quarterly VAT statistics tables (January to March 2021) data tables.

Chart 1 demonstrates the following trends:

• up until 2019 Q3 Total VAT Receipts were steadily rising
• very low Home VAT receipts were recorded in 2020 Q1 coinciding with the period when businesses were able to defer their VAT payments
• Home VAT receipts have been high in recent quarters as these have included repayments of deferred VAT from earlier in the year

Import VAT receipts were lower for the current quarter. This is mainly due to postponed VAT accounting (PVA). Since January 2021, traders have been able to include Import VAT on their regular VAT return.

Payments made using PVA are recorded as Home VAT payments and not Import VAT. Only traders who are continuing to pay Import VAT under the previous regime are contributing to Import VAT receipts as reported above.

Home VAT and Import VAT

Total VAT is the sum of Net Home VAT and Import VAT receipts. The following refer to the latest quarter (January 2021 to March 2021):

• Net Home VAT receipts increased by £11,138 million (51.3%) this quarter compared to the same quarter last financial year

• Home VAT payments increased by £10,432 million (23.2%) this quarter compared to the same quarter last financial year

• Home VAT repayments decreased by £707 million (3.1%) this quarter compared to the same quarter last financial year

• Import VAT receipts decreased by £1,482 million (19.9%) this quarter against the same quarter last financial year

Import VAT receipts were lower for the current quarter. This is mainly due to postponed VAT accounting (PVA). Since January 2021, traders have been able to include Import VAT on their regular VAT return.

Payments made using PVA are recorded under Home VAT payments and not Import VAT. Only traders who are continuing to pay Import VAT under the previous regime are contributing to Import VAT receipts as reported above.

Home VAT means VAT declared on VAT returns, which from January 2021 includes import VAT paid through PVA.

Chart 2: Net Home VAT and Import VAT receipts for this year and the 2 previous financial years

For the full dataset that accompanies Chart 2 go to Quarterly VAT statistics tables (January to March 2021) data tables.

Chart 2 is a bar chart showing monthly trends in Home VAT and Import VAT for the last 3 financial years:

• from March 2020 to June 2020 we had negative Home VAT as a result of the VAT deferral measure

• Home VAT receipts were low in July 2020 and August 2020 compared to recent years reflecting the low levels of economic activity in the preceding few months

• between September 2020 and February 2021, Home VAT receipts have fluctuated in comparison to previous years, but these months have included (to varying degrees) repayments of VAT deferred from earlier in the year

• Home VAT in March 2021 was substantially higher than previous years due to large repayments of deferred VAT in this month

Since February 2021 comparisons of Import VAT with receipts from previous years are no longer meaningful as many traders are now paying Import VAT as part of their regular VAT return under the new PVA arrangements.

Chart 3: VAT payments and repayments for this year and the 2 previous financial years

For the full dataset that accompanies Chart 3 go to Quarterly VAT statistics tables (January to March 2021) data tables.

Chart 3 is a bar chart showing monthly trends for VAT payments and VAT repayments for the last 3 financial years:

• VAT payments were very low from March 2020 to June 2020 when many traders were deferring their VAT payments

• VAT payments were low in July 2020 and August 2020, compared to recent years reflecting the low levels of economic activity in the preceding few months

• VAT payments since July 2020 have been boosted each month by repayments of deferred VAT, with the highest level for repayment of deferred VAT seen in March 2021

• since April 2020, levels of VAT repayments have been broadly the same as those seen in previous years

• VAT repayments in January 2021 were low mainly due to timing effects, whereby repayments expected to made in January 2021 were instead made in December 2020 or February 2021

• these same timing effects caused VAT repayments to be higher in December 2020 and February 2021

Since April 2020 we have started to see a higher number of repayments but of lower value. This can be partly explained by a large number of businesses moving from a net payment position to a net repayment position as a result of economic downturn.

The reduced VAT rate for hospitality, holiday accommodation and some atttractions (effective between 8 July 2020 and 30 September 2021) also contributes to some businesses moving to a net repayment position.

VAT trader population

Chart 4: Quarterly VAT registrations and de-registrations over the last 10 financial years

For the quarter from January 2021 to March 2021:

• 91,816 new registrations

• 31,011 de-registrations

• the VAT trader population has increased by 60,805 (2.5%) this quarter

Chart 4 is plotted in quarters and Q1 refers to the first quarter of the financial year. Hence, 2020 Q1 refers to the months between April 2020 and June 2020.

For the full dataset that accompanies Chart 4 go to Quarterly VAT statistics tables (January to March 2021) data tables.

Chart 4 demonstrates the following trends:

• large increases in new registrations were seen in the second and fourth quarters of the current financial year
• for the current quarter we have seen the highest number of new registrations on record
• de-registrations have remained very low throughout the 4 quarters of the past financial year

There was a substantial increase in the number of de-registrations in mid-2017, with a smaller spike in early 2019; in both cases at this point the number of de-registrations exceeded new registrations. We believe this could be explained by trader behaviour associated with changes in relation to the Flat Rate Scheme.

Chart 5: Live VAT trader population over the last 10 financial years

The size of the trader population now stands at 2,488,679 (up by 2.5% since the previous quarter).

Chart 5 is plotted in quarters and Q1 refers to the first quarter of the financial year. Hence, 2020 Q1 refers to the months between April 2020 and June 2020.

For the full dataset that accompanies Chart 5 go to Quarterly VAT statistics tables (January to March 2021) data tables.

Chart 5 demonstrates the following trends:

• there has been substantial growth in the live VAT trader population over the last financial year
• the VAT trader population has seen a near continuous upward trend since 2013 from around 1.9 million traders in 2012 to 2.5 million today
• the only reductions observed in trader numbers are linked to the spikes in de-registrations previously referenced

For the 2020 to 2021 financial year we have seen the highest number of new VAT registrations on record and the number of VAT de-registrations has remained very low throughout the year. Thus, we have seen substantial growth in the live VAT trader population over the last financial year with a net rise of 182,284 traders (7.9%) since March 2020.

Recent growth in the trader population has been more pronounced, driven both by high levels of new registration and low levels of de-registration.

Contacts

The UK Quarterly VAT Statistics Bulletin is produced by the Indirect Tax Receipts Monitoring team as part of the Excise duties, VAT, and other tax statistics collection.

For statistical enquiries, contact:

Simon Taylor
revenuemonitoring@hmrc.gov.uk

For media enquiries, see HMRC press office. Phone: 03000 585 028.