FSB: VAT rise will be detrimental to small businesses

Date: 4th January 2011

Small business owners operating in various industries across the UK could be among those interested in the recent comments of one expert regarding the VAT rise.

According to the Federation of Small Businesses (FSB), more than 70 per cent of the country's smaller firms expect today's (January 4th) rise to have a negative impact on their operation.

As of today, VAT will be charged at 20 per cent after the coalition government introduced a 2.5 per cent rise from 17.5 per cent.

John Walker, national chairman of the FSB, commented: "If the government truly believes that the private sector is going to strengthen the recovery we need to see action.
"Increasing the threshold at which companies have to register for VAT will put almost £900 million back in the pockets of small businesses. Without this small firms will struggle to bounce back as the spending cuts start to bite."

The study also showed that 52 per cent expect to increase prices as a result of the VAT rise, while a further 45 per cent expect to see a fall in turnover and 36 per cent expect a loss of customers.

Posted by Thomas Fletcher