Small Businesses: Costs
The question
To ask the Chancellor of the Exchequer, what steps she is taking to support sole traders and small family-run businesses with the cost of (a) inflation and (b) living; and if she will review VAT thresholds and business rates for small enterprises.
Answered by James Murray
The Government recognises the important role that small businesses and sole traders play in the economy, and the impact that inflation can have on them. We are putting the public finances on a sustainable path and investing in the future, creating a stable environment for growth.
At the Budget we introduced a range of tax measures that benefit small businesses and sole traders. These included:
• More than doubling the Employment Allowance to £10,500. This means more than half of businesses with NICs liabilities will either gain or see no change this year.
• Maintaining the Small Profits Rate and marginal relief at their current rates and thresholds, as well as maintaining the £1 million Annual Investment Allowance; and
• Freezing the small business multiplier for 2025/26 meaning that, taken together with Small Business Rate Relief (SBRR), over a million properties are protected from inflationary bill increases.
The Budget announcements on business rates reflect the Government’s first steps to support the high street. We want to go further to modernise the system, and so, we have published a Discussion Paper setting out priority areas for reform. This paper invited industry to help co-design a fairer business rates system that supports investment and is fit for the 21st century.
At £90,000, the UK has a higher VAT registration threshold than any EU country and the joint highest in the OECD. This means the majority of UK businesses are kept out of the VAT system.
Verbatim has judged this answer against the question that was actually asked — answered, partly answered, or evaded. Sign in to see the verdict →