Increase in VAT thresholds could create hundreds of jobs in Falkirk district’s small firms

Hundreds of jobs could be created in Falkirk district if the threshold at which small firms start to pay VAT was increased, said the Federation of Small Businesses (FSB) this week.

A UK-wide FSB report shows that increasing the VAT threshold from £70,000 to £90,000 could put £900 million back into small firms, allowing them to improve cash-flow, expand their businesses and employ more staff.

While this would affect the amount of money the Treasury receives, it would be more than offset by the potential £13 billion which will come from the increase in VAT to 20 per cent, due to come into force on 4 January 2011.

Commenting on the impact this would have on Falkirk district’s economy the SNP’s Economic Development spokesperson, Councillor Angus MacDonald said:

“An increase in the VAT threshold from £70,000 to £90,000 would be of enormous benefit to local small businesses. It is a fact that many small businesses in Falkirk district do not want to register for VAT because of the red tape. These businesses choose to operate below the VAT threshold but could easily expand their business if the threshold was increased.

“The current VAT threshold can stifle the local economy, with some businesses choosing to stop operating if they are getting close to the VAT threshold.

Councillor MacDonald, who is also the SNP candidate for Falkirk East at the next Scottish Parliament election continued:

“There is no doubt that the increase in VAT  to 20 per cent on 4th January will affect the competitiveness of VAT registered businesses when compared to non-VAT registered businesses because the increases will have to be passed on to the customer. If the UK Government is truly committed to a private sector led recovery, as it says it is, then it must allow small firms to grow and invest. In addition to the success of the Scottish Government’s Small Business Bonus, which has saved 1579 of Falkirk district’s small businesses an average of £2801 over the period 2007-09, the UK Government must play its part as well, and an increase in VAT thresholds would help immensely.

“An increase in the VAT threshold coupled with the Small Business Bonus will help to improve the economic situation faced by many of our local small business, allowing them to invest, grow and ultimately employ more local people."

The report, 'Increasing the VAT registration threshold for small businesses', was commissioned by FSB and compiled by the Centre for Economics and Business Research (CEBR) and is available to view at

Copyright © Angus MacDonald MSP 2017

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