Reform has today announced our fair deal for the White Van man.
We will raise the VAT registration threshold from £90,000 to
£150,000 and increase it in line with inflation going
forwards.
We estimate that this will cost £2.4 billion a year, though we
expect it to fall closer to £2.1 billion once behaviour adjusts.
This is not money lost to the economy. It stays with the
tradesmen who earn it and the households who hire them.
We believe that the multiplier effect will be significant and the
long-run fiscal benefits of the productivity boost will be
greater than the cost. 44,000 firms are expected to cap their
revenue below £90,000. 280,000 firms currently generate revenue
between £90,000 and £150,000. As such this intervention will
directly benefit 320,000 firms almost immediately.
The threshold has become a tax on ambition. Since 2017 prices
have risen by more than a third, while the threshold has crept up
just 6%, from £85,000 to £90,000. This is taxation by stealth.
Rather than making the political argument for higher taxes,
successive governments have allowed fiscal drag to eat into the
earnings of honest tradesmen.
This announcement is only possible due to the courage of the
British people in voting for Brexit. EU law limits the VAT
threshold to 100,000. We are no longer bound by this, instead we
can and will side with workers and introduce Europe's most
competitive VAT regime.
Whilst today we are talking about the White Van man, the same
cliff edge traps every small business. The hairdresser turning
clients away to stay below the threshold, the coffee shop closing
early to hold down its revenue. Lifting the threshold will allow
businesses of all kinds to thrive, from florists to pedicurists.
Reform Leader MP said:
There are 3.2 million sole traders in Britain. Plumbers,
electricians, builders, the people who actually keep the country
running. In Wigan alone there are thousands of them, men like
Robert Kenyon, who get up early, work hard and go to bed late. We
call them alarm clock Britain. For decades the political
establishment, of every stripe, has ignored them.
When we abolished tax on overtime we promised we would also
deliver for the self-employed and those running small businesses.
This is the first of those offers. The policy we have announced
today will lift tens of thousands of sole traders out of VAT and
end a brutal cliff edge.
To working Britain, our message is simple - employed or
self-employed, we are on your side.
ENDS
Notes to Editors
Click here to read the full policy
document.
