The government faces a difficult fiscal balancing act at the Budget. With pressure mounting to plug the public finances, policymakers are weighing two familiar doors: stimulate growth or increase taxes. VAT, and specifically the VAT registration threshold, has become a focal point of this debate. 

At present, the UK’s threshold stands at £90,000, the joint highest in the OECD and more than double the EU average. This creates both opportunities and challenges, and recent discussion has raised the possibility of moving the threshold significantly in either direction.

The case for raising the threshold