Lowering the threshold for VAT registration in the Autumn Budget would breach
Labour's manifesto, IPSE, the Self-Employed Association has warned.
IPSE says that the government is in a bind both politically and economically.
Having ruled out tax rises on 'working people' and hiking employer National
Insurance contributions (NICs) the Chancellor's options are limited.
IPSE asks, in these circumstances will Ms Reeves reform taxes rather than raising
them?
Sole traders are required to register for, charge and pay VAT once their annual
turnover goes over £90,000.
IPSE says this threshold can put a ceiling on the ambitions of sole traders
earning close to that amount; they may be reluctant to artificially increase the
price of their services by 20%, giving customers and clients a reason to buy
from competitors.
Newspaper reports say that the Treasury is now considering slashing the threshold
to as low as £30,000.
Fred Hicks, Senior Policy and Communications Adviser at IPSE, said:
'This would make registering for VAT unavoidable for anyone whose main source
of income is from self-employment, and then some.
'Cutting the VAT registration threshold is not the same as increasing rates
of VAT – even if it ultimately ends up with more people having to charge and
pay it. And if this radical reform did go ahead, this may well be how
government justifies it.
'But make no mistake – in IPSE's eyes, it absolutely would be a breach of
their commitment – and a breach of faith – to claim that dragging people
into paying a new tax is not the same as putting their taxes up.'
Internet link: IPSE