The 2026 Budget increase in the VAT registration threshold may come as a relief to many smaller businesses. From 1 April 2026, the compulsory VAT registration threshold increased from R1 million to R2.3 million, while the voluntary registration threshold increased from R50,000 to R120,000.
For some businesses, that may make VAT deregistration worth considering.
But deregistration does not always mean the VAT story is over.
The important part
Many vendors assume that once they deregister, VAT simply falls away.
It is not always that simple.
If assets remain in the business on exit, output VAT may still need to be accounted for in the final VAT return. That is often where the surprise sits.
What kinds of assets can be affected?
The risk often comes up with assets such as:
- delivery vehicles
- equipment
- furniture
- trading stock
- certain rights or other assets that formed part of the enterprise
The real takeaway
The higher threshold may bring welcome relief.
But VAT deregistration is not always just an admin step. If assets remain on hand, there may still be an output VAT consequence on exit.
Disclaimer: This article is for general information only and does not constitute tax, legal, or financial advice. Whether VAT is payable on deregistration depends on the specific facts, the nature of the assets, and the application of the VAT Act to the vendor’s circumstances.
