Reform UK has proposed increasing the UK VAT registration threshold from £90,000 to £150,000, arguing that the current threshold discourages small businesses from growing and creates unnecessary compliance burdens. The party estimates that around 750,000 businesses would benefit, although the measure would cost the Treasury approximately £2.1 billion per year. Reform also plans to make quarterly digital tax reporting voluntary for sole traders, reversing parts of the Making Tax Digital regime. While the proposal may reduce compliance costs, critics argue that it simply shifts the VAT “cliff edge” to a higher level rather than eliminating it, meaning businesses may still restrict growth to avoid registration. The proposal is not current government policy and would only be implemented if Reform UK wins the next General Election.
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