Tory backlash after Brexit rules 'stopped Jeremy Hunt cutting red tape for White Van Man in Budget'
Rishi Sunak is facing a backlash after claims Brexit rules stopped the government cutting red tape for 'White Van Man'.
At the Budget on Wednesday Chancellor Jeremy Hunt nudged up the threshold for small businesses needing to register for VAT from £85,000 to £90,000.
That ended a freeze that has been in place since 2017 - but was criticised as too little amid estimates that thousands of firms are supressing their incomes to avoid extra bureacracy.
Mr Hunt is reported to have told Tory MPs that a larger increase in the threshold could only happen in mainland Britain.
Under the Windsor Framework agreed by Mr Sunak, the UK must ensure that Northern Ireland businesses do not have a significant tax advantage over the EU, where the VAT threshold is €100,000.
Treasury sources insisted the 'key reason' the increase was not larger was 'lack of funds'. They stressed there was some 'flexibility' in the Brexit rules.
![At the Budget on Wednesday Chancellor Jeremy Hunt nudged up the threshold for small businesses needing to register for VAT from £85,000 to £90,000](https://i.dailymail.co.uk/1s/2024/03/08/13/82211615-0-image-a-3_1709906099867.jpg)
At the Budget on Wednesday Chancellor Jeremy Hunt nudged up the threshold for small businesses needing to register for VAT from £85,000 to £90,000
![The OBR had warned of increasing 'distortion' being caused by the plan to hold the turnover level for VAT registration at £85,000](https://i.dailymail.co.uk/1s/2024/03/08/13/68817657-0-The_OBR_has_warned_of_increasing_distortion_being_caused_by_the_-a-2_1709905325444.jpg)
The OBR had warned of increasing 'distortion' being caused by the plan to hold the turnover level for VAT registration at £85,000
![Former Cabinet minister Jacob Rees-Mogg warned of the implications of the Brexit rules](https://i.dailymail.co.uk/1s/2024/03/08/12/82205547-0-image-a-1_1709902211690.jpg)
Former Cabinet minister Jacob Rees-Mogg warned of the implications of the Brexit rules
Former Cabinet minister Jacob Rees-Mogg said: 'The Windsor Framework is keeping the United Kingdom aligned to the EU and removing some of our economic freedoms.'
David Jones, deputy chair of the Brexit-backing Conservative caucus the European Research Group, told the Guardian it was a 'great shame because the VAT threshold is too low, it's dissuading people from setting up a business or expanding their existing businesses'.
The Treasury source said: 'The UK has a higher VAT registration threshold than any EU Member State and the second highest in the OECD of advanced economies.
'This keeps the majority of UK businesses out of VAT altogether.'
The Federation of Small Businesses (FSB) had lobbied the Government to raise the threshold to £100,000.
It said the level was acting as a 'straitjacket to firms eager to expand, because they end up tiptoeing around it to avoid extra costs.'
Extra bureaucracy with HMRC also means added costs on compliance and an average £4,100 spent on expenses like software or accountants, according to the lobby group.