Image source, fake images
Jeremy Hunt said “tens of thousands of businesses” would stop paying VAT altogether
The chancellor’s decision to increase the VAT registration threshold from £85,000 to £90,000 for small businesses was “not a great gesture”, one restaurant owner has claimed.
The government says the investment will allow around 28,000 businesses to stop paying VAT, although many expected it to reach up to £100,000.
Julie Jampa described it as “just a little nod.”
Jampa, who runs a Tibetan restaurant in Oxford with her husband and whose hot food is subject to a 20% VAT rate, had hoped for a tax “more in line with the reality of how small businesses trade”.
He told the BBC: “There are so many restaurants closing.
“That 20%… is for many companies their profit margin, and I think it’s necessary to recognize that small businesses cannot withstand that kind of impact.”
He said the cost of utilities and raw materials also continued to rise, and “it pains us to have to raise our prices to make ends meet.”
‘Companies fight’
Dharshini David, the BBC’s chief economics correspondent, said raising the threshold “relieves a form of fiscal burden and increases incentives to work.”
But he added: “It has been frozen for seven years – the £5,000 increase does not fully compensate for it.”
The change comes from April 1.
“This will allow tens of thousands of businesses to stop paying VAT and encourage many more to invest and grow,” Hunt said.
But Jampa said: “It will not make a significant difference to the vast majority of small and medium-sized businesses struggling with various issues, including this rather low VAT threshold.
“We also hoped that the government would consider introducing a sliding scale after businesses reach that threshold that can facilitate small businesses with a more comfortable period of growth.
“We haven’t seen that, so it’s pretty disappointing.”
A new tax on vaping products will begin in October 2026
Another announcement made by the chancellor, outlining the government’s tax and spending plans, was a tax on vaping products due to start in October 2026, following a consultation.
Brett Cundwell, of Triumph Vapes in Didcot, said he did not believe it would have a major impact.
He said prices would “go up slightly” but called on the government “to license vape shops and only allow shops to sell vaping products” to better control underage vaping or to prevent non-smokers from starting. to vape.
He said: “If they introduce the tax then we will get by with a tax on vaping products.
“They’re trying to put it in the same range as tobacco, which they’re not, but as an industry we’ll deal with what they bring.”
Hunt also said the existing tax on tobacco would increase because “vaporizers can also play a positive role in helping people quit smoking.”
The one-off tobacco tax increase would “maintain the financial incentive to choose vaping over smoking”, he told Parliament.
The government’s 2024 spring budget document also gives the “green light to the next section” of East West Rail, with services operating between Oxford and Bedford “by the end of the decade”.
The railway line, when completed, will link Oxford and Cambridge via Bletchley, Milton Keynes and Bedford.