Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an estimate of the potential impact of increasing the VAT registration threshold by the retail price index in each year to March 2026 on annual VAT revenues.

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. Any business with turnover of £85,000 or less does not have to register for VAT.

At Autumn Statement 2022 the Government announced that the VAT Registration Threshold would be frozen for two further years until March 2026. The Exchequer impact of this measure is shown in Table 4.2, Spring Budget 2023: Spring Budget 2023 - GOV.UK (www.gov.uk). This costing has been certified by the Office for Budget Responsibility.