FSB: Increased VAT threshold could create thousands of jobs

Date: 8th December 2010

The threshold at which small businesses start to pay VAT should be increased.

That is the view of the Federation of Small Businesses (FSB), which said doing so would allow smaller firms to create thousands of new jobs.

Currently, the VAT threshold is set at £70,000 but by increasing it to £90,000 the government could help small businesses create 35,000 new jobs, the FSB has claimed.

John Walker, national chairman of the organisation, said: "The smaller the business, the higher the cost of VAT compliance; this is why the FSB is calling for the government to increase the threshold at which a business must register for VAT.

"If the government is truly committed to a private sector-led recovery, then it must implement a Small Business Programme for Growth to allow small firms to grow and invest - and this would be a great start."

The FSB also said the move would mean a £162 million reduction in red tape costs and save more than £700 million in VAT payments.

It comes as the rate of VAT is set to increase from 17.5 per cent to 20 per cent from January 4th next year.

Posted by Emily Smith