Small Businesses: VAT
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the impact of the VAT (a) threshold and (b) rates on the (i) growth and (ii) financial sustainability of small businesses.
Answered by James Murray
At £90,000, the UK has a higher VAT registration threshold than any EU country and the joint highest in the OECD. This keeps the majority of businesses out of the VAT regime altogether.
The Government’s approach to the VAT threshold and applicable rates aims to balance potential impacts on small businesses, including their growth and financial sustainability, the economy as a whole, and tax revenues. Tax breaks reduce the revenue available for public services and must represent value for money for the taxpayer.
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