UK Should Lower or Abolish VAT Threshold to Boost Small Business Growth and Efficiency

• The UK Treasury is considering raising the VAT registration threshold from £90,000.
• The UK already has one of the highest VAT thresholds in the OECD.
• Raising the threshold could hinder small business growth and reduce VAT system efficiency.
• The government should consider lowering or abolishing the threshold instead.
• Simplifying the VAT system could reduce administrative and compliance costs.
• Businesses below the threshold do not collect VAT on sales but also do not get VAT refunds on inputs.
• The UK threshold is the third-highest in the OECD in terms of purchasing power parity.
• High thresholds favor smaller firms, leading to market distortions and lost government revenue.
• Businesses near the threshold may limit growth to avoid crossing it and incurring higher costs.
• The high threshold may prevent small businesses from achieving productivity gains.

Source: taxfoundation.org

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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