Help end the VAT doomloop. Operating a small business is challenging, especially when reaching a threshold that demands a higher VAT rate. Small businesses which exceed the £150,000 threshold (under which a flat 10.5% VAT rate applies) immediately lose 20% VAT. This creates a baffling situation where growing a business results in a financial penalty. You find yourself in a position where you are financially better off by reducing your turnover. Astonishingly, you only see a financial benefit when turnover reaches about £170,000, due to the increased VAT burden once you exceed £150,000. This system punishes growth rather than encouraging it, creating a disincentive. It actively pays to stay small or even shrink your business! For example, a business taking £170000 is only £3000 better off than if if took £149000

To address this issue, I am calling for the threshold to be raised from £150,000 to £250,000. By implementing this change, more businesses could qualify for the 10.5% VAT scheme, fostering growth and sustainability in small enterprises throughout the UK. Considering that small businesses are pivotal in driving our economy through innovation, job creation, and community investment, it's crucial to support them with tax policies that encourage expansion rather than hamper it.

Additionally, raising the VAT threshold aligns with the need for reform in a post-pandemic economy. Many small businesses are still recovering from the impacts of COVID-19, and an increased threshold provides a much-needed buffer, ensuring these businesses can reinvest their profits and contribute to economic recovery without being immediately penalised. The previous government recognised the struggle during COVID and temporarily reduced the VAT on small leisure businesses to 5%. This sort of help is still much needed today.

Small businesses make up over 99% of all private sector businesses in the UK, employing millions and contributing significantly to the GDP. It is essential that our tax policies reflect the realities of operating in today’s market. By raising the VAT threshold, the government can demonstrate its commitment to supporting small enterprises and fueling nationwide economic growth.

Join me in urging policymakers to increase the VAT threshold to £250,000. This change will empower businesses to grow without fear of financial repercussions, enabling them to thrive and sustain their contributions to the UK's economy. Please sign this petition to support a more equitable tax system for small business owners.