Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential implications for his policies of the British Hair Consortium commissioned CBI Economics report entitled Securing the future of UK hairdressing and beauty: the economic, fiscal and societal case for VAT reform, published on 19 February 2025.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax, forecast to raise £171 billion in 2024/25. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer. Exceptions to the standard rate have always been limited and balanced against affordability considerations.

Changes to the VAT threshold have to be carefully balanced considering the potential benefits to small businesses, the economy as a whole and tax revenues.