Overview

This bill aims to expand the definition of "children's clothing" for Value Added Tax (VAT) exemption purposes, broadening it to include more school uniforms and raising the age limit for children's clothing exemption to 18 years old. It seeks to reduce the cost of clothing for families by removing VAT from a wider range of items.

Description

The bill makes two key changes to the Value Added Tax Act 1994:

Expanding the Definition of Children's Clothing

The current VAT exemption for children's clothing will be extended to include all children under 18 years of age (currently it applies to 'young children'). The Treasury will define 'children's clothing and footwear' based on average measurements, with the power to update this definition if average measurements change significantly.

Zero-Rating School Uniforms

The bill introduces a new zero-VAT category for items designed as school uniforms. This will apply to items that: (a) bear a school logo or insignia; (b) are sold by or through a school; or (c) are sold through a method that the Treasury will define via order. The bill also specifies that "school" includes both schools as defined by section 551A(5) of the Education (Guidance about Costs of School Uniforms) Act 2021 and any other establishment the Treasury may specify.

Government Spending

The bill will likely result in a reduction in VAT revenue for the UK government. The exact amount is difficult to predict without knowing the precise number of items that will become exempt, but it is expected to represent a significant loss of tax revenue. Specific figures are unavailable within the provided text.

Groups Affected

• Families with children under 18: Will likely benefit from lower clothing costs, particularly those purchasing school uniforms.
• Retailers selling children's clothing and school uniforms: May experience increased sales due to lower prices.
• Schools: May see changes in their purchasing practices and potentially reduced uniform costs for families associated with their school.
• The UK Treasury: Will experience a reduction in VAT revenue.

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