Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what estimate he has made of the number of additional businesses that have become registered for VAT as a result of the decision to freeze the VAT registration threshold at £85,000 from 1 April 2018 to 31 March 2022, compared to a baseline scenario where the VAT registration threshold was revalorised over that period.

The UK has a higher VAT registration threshold than any EU Member State and the second highest in the OECD at £85,000. This keeps the majority of businesses out of VAT altogether. At Autumn Statement it was announced that the threshold would remain at £85,000 for two further years until 31 March 2026. It is estimated this will bring around 60,000 businesses into VAT.

Previous forecasts for number of businesses brought into VAT can be found at the following links for 2018, 2020 and 2022. The total number of VAT registered traders in each year can be found here.