Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of raising VAT thresholds for small business.

The Government recognises that accounting for VAT can be a burden on small businesses. This is why, at £85,000, the UK has a higher VAT registration threshold than any EU Member State and the second highest in the OECD. This keeps the majority of UK businesses out of VAT altogether. Views on the VAT registration threshold are divided and the case for change has been regularly reviewed over the years.

In 2018, the Government consulted on how the design of the VAT registration threshold could better incentivise growth. However, there was no clear option for reform.

While the Government keeps all taxes under review, it was announced at Autumn Budget 2022 that the VAT threshold will be maintained at its current level of £85,000 until 31 March 2026.