Small businesses are bracing for a major shake-up after it emerged the Treasury is considering slashing the VAT registration threshold from £90,000 to just £30,000. Analysts said the measure would be felt most sharply by small traders such as electricians, builders, hairdressers and consultants, many of whom deliberately keep their turnover just under the current £90,000 threshold to avoid registration. Lowering the bar to £30,000 would leave far fewer with that option, raising prices for customers and adding to paperwork burdens. The Federation of Small Businesses has long argued that a steep drop in the threshold would trap fledgling companies in “VAT limbo,” where they must pass on higher costs but struggle to compete with unregistered rivals. If Reeves proceeds, it would represent one of the most significant overhauls of VAT in decades, potentially reshaping the landscape for Britain’s 5.5 million small businesses.