Reform UK has unveiled plans to introduce a new tax break for small businesses, targeting what party leader Nigel Farage describes as 'alarm clock Britain'. The proposal would raise the VAT registration threshold from the current £90,000 to £150,000, providing an additional £60,000 buffer before sole traders and small businesses must charge VAT.
Supporting Small Businesses
Speaking ahead of the Makerfield by-election, Mr Farage argued that the existing threshold acts as a 'tax on ambition', discouraging growth among plumbers, electricians, builders, and other self-employed workers who form the backbone of the economy. He stated: 'There are 3.2 million sole traders in Britain. In Wigan alone there are thousands of them, men like Robert Kenyon, who get up early, work hard and go to bed late. We call them alarm clock Britain.'
The party estimates that the policy would benefit 320,000 small businesses. Of these, 44,000 have deliberately capped their revenue to stay below the current threshold, while the remaining 280,000 firms generate revenue between £90,000 and £150,000.
Cost and Economic Impact
Reform UK acknowledged that the tax break would initially cost the government over £2 billion. However, the party argues that this would be offset by long-term fiscal benefits from increased productivity across the UK economy. Mr Farage previously told City AM that the VAT threshold was 'far too low', particularly for 'one or two-man bands' that find themselves on the cusp.
Economist Ben Ramanauskas offered a contrasting view, noting that while VAT is a constraint on growth, raising the threshold would come at 'considerable expense to the public finances'. He suggested that the government should instead lower or abolish the threshold and broaden the VAT base to 'get the pain out of the way earlier'.
Party Funding Questions
Separately, Reform UK has addressed questions about large donations. Richard Tice stated that the party is 'not aware' of any other significant gifts to Nigel Farage or senior figures beyond the £5 million donation from crypto billionaire Christopher Harborne. Tice added: 'None that I'm aware of. The answer is none that any of us are aware of. At the end of the day, we are saying to people: You've got to trust us. We are working incredibly hard and are confident in what we're doing and, at all times, our clear view is we're complying with the rules.'
