Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what assessment he has made of the potential merits of reducing the £85,000 VAT threshold for businesses.

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.

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, and it was announced at Budget 2021 that the VAT threshold will be maintained at its current level of £85,000 until 31 March 2024.