UK Chancellor Rachel Reeves plans no increase to the standard 20% VAT rate in the November 2025 budget but is considering adjustments to zero-rated or 5% rates to raise revenue. Potential changes include cutting the high VAT registration threshold of £90,000, which would bring more small businesses into the system, or imposing VAT on currently exempt services like private taxis or certain financial services. These exemptions and reduced rates currently cost an estimated £100 billion annually in lost revenue while creating a complex compliance burden. The Chancellor has several options for VAT threshold reform, such as lowering it to £60,000 or implementing tiered rates, alongside opportunities to expand VAT to previously exempt sectors post-Brexit.
Source: fiscal-requirements.com
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