answer text |
<p>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. Nearly half of businesses that are VAT registered are voluntarily
registered under the threshold.</p><p>Views on the 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.</p><p>Following
the Office of Tax Simplification report published on 7 November 2017, the Government
published a call for evidence on 13 March 2018 inviting views on the effect of the
current threshold and what policy options could better incentivise growth. A summary
of responses was published at Budget 2018. The responses did not provide a clear option
for reform.</p><p> </p><p>While the Government continues to keep all taxes under review,
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.</p><p> </p><p> </p>
|
|