Reform UK has announced a major new tax cut aimed at white van men, pledging to raise the VAT registration threshold to £150,000.
Small businesses and sole traders currently begin paying VAT at £90,000, creating a major cliff edge that disincentivises investment and growth.
Speaking at a press conference this afternoon, Nigel Farage said the tax cut is the ‘right thing to do’, and shows that Reform is ‘on the side of working people in this country’
The party said that the policy would carry a face-value cost of £2.4 billion, but this will fall to £2.1 billion as small businesses change their behaviour and investment decisions thanks to the incentive boost.
The rest will be paid for by pre-announced spending cuts worth £40 billion to Net Zero subsidies, welfare, the civil service, and foreign aid.
It comes after Reform pledged last month to scrap income tax on overtime above a 40-hour week for those earning less than £75,000.
Mr Farage said that the threshold hike is only possible thanks to Britain’s newfound Brexit freedoms, as EU law limits members’ VAT thresholds to €100,000.
He championed the policy as something that would help give growth incentives to 750,000 businesses ‘on day one’.
Mr Farage poses with local small business owners
Reform’s new policy is pitched at white van men, like plumber candidate Robert Kenyon (right)
Mr Farage says he would not impose VAT registration on small businesses and sole traders before £150,000, up from the current £90,000
Will raising the VAT threshold really help small businesses grow or just benefit a few wealthy traders?
He added: ‘What it will also do is increase productivity, because there are tens of thousands of companies whose income levels are just below the VAT threshold.
‘They’ve got no incentive to take on another contract, no incentive to take on more work, so this will also boost productivity. It is the right thing to do.
‘We are on the side of working people in this country.’
Once the threshold is raised to £150,000, a Reform government would then continue increasing the cliff edge in line with inflation every year.
Mr Farage and Robert Kenyon, his Makerfield candidate who still works as a plumber, also announced that Reform would reverse recent changes that force sole traders with incomes of over £50,000 to file financial information to HMRC four times a year.
The Reform leader branded the change among ‘several bugbears’ weighing entrepreneurs down with red tape.
Surrounded by white vans, Mr Farage told the audience in Makerfield: ‘The idea that a sole trader now has to register online for tax four times a year, frankly, under pain of a terrible penalty if they make the slightest error.
‘This is probably good news for local accountants, who are having to do all the work, but it’s not good news for the self-employed. We will get rid of that provision.’
Instead the party will reintroduce single annual returns, and convert the ‘Making Tax Digital’ programme into an ‘optional scheme’.
They cited HMRC research that estimates compliance with the quarterly returns will cost the average self-employed taxpayer £330 upfront.
