The VAT threshold was kept at £85,000 in today’s Autumn Budget.
The chancellor told the House of Commons: “I am grateful to the Office for Tax Simplification for their recent report on the VAT registration threshold. At £85,000 The UK’s VAT threshold is by far the highest in the OECD. By contrast, in Germany it is just £15,600.
“I note the OTS conclusion that it distorts competition and disincentivises business growth. I also note the Federation of Small Businesses’ concerns about the cliff edge of the threshold.
“But such a high threshold also has the benefit of keeping the majority of small businesses out of VAT altogether.So I am not minded to reduce the threshold. But I will consult on whether its design could better incentivise growth.
“And in the meantime we will maintain it at its current level of £85,000 for the next two years.”
Steve Seal, director of sales & distribution, Bluestone Mortgages, said: “With the recent speculation of the VAT threshold being lowered, today’s Budget will bring a sigh of relief to contactors, freelancers and entrepreneurs who form a vital part of our 4.85 million strong self-employed workforce. This group forms the backbone to our economy and although the government clearly understands this, not all lenders do.
“These borrowers are still more likely to be rejected by high-street lenders due to their complex and irregular income patterns, but specialist lenders are there to help these customers find affordable solutions. Today’s news is a step in the right direction, but as our economy changes, more still needs to be done by lenders to give these borrowers access to the financial products they need.”