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VAT increase could create ’35,000 jobs’

Small enterprises in the UK could employ an additional 35,000 people if the current VAT threshold is increased, according to one industry body.

Raising the VAT threshold from £70,000 to £90,000 will save firms £862 million in total, according to the Federation of Small Businesses (FSB), citing a study conducted by the Centre for Economics and Business Research.

It is estimated that £700 million in payments could be kept by firms, while an additional £162 million would be saved because of the reduction in red tape.

Commenting on the figures, FSB national chairman John Walker 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.”

He added that the forthcoming VAT hike would also cover lost revenue to the Treasury.

A higher threshold for business VAT could protect firms that are unable to absorb the January increase, the report also claimed.


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