Gordon Brown has announced the government will review the VAT system for small businesses with the aim of simplifying it, as part of a range of tax measures to help the sector.
In his pre-Budget statement, he said the VAT revamp would help 500,000 businesses. The cash accounting scheme will benefit up to 40,000 traders by extending the turnover limit from #350,000 to #600,000.
The change will mean traders won’t have to pay VAT until customers pay them.
Also, 100,000 more businesses are set to benefit from annual rather than quarterly filing of VAT returns by raising the turnover limit from #300,000 to #600,000.
The VAT threshold limit will be raised annually in line with inflation.