Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of increasing the threshold above which businesses are liable to pay VAT.

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. While some businesses have argued that a higher threshold would reduce administrative and financial burdens, others contend that a lower threshold would provide a fairer competitive environment.

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.