Overview

This bill aims to expand the definition of "children's clothing" for Value Added Tax (VAT) purposes and to make school uniforms VAT-free. This would lower the cost of clothing for families with children.

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 children up to the age of 18, rather than just "young children". The Treasury will define "children's clothing" and "footwear" based on average child measurements, allowing for future adjustments as average sizes change.
• Zero-rating school uniforms: School uniforms will be zero-rated for VAT. This applies to items with school logos or insignia, sold directly by or through a school, or sold in a manner defined by the Treasury. The definition of 'school' will include those defined in the Education (Guidance about Costs of School Uniforms) Act 2021.

The bill applies to England, Wales, Scotland and Northern Ireland and will come into effect on 1 April 2024.

Government Spending

The bill will likely lead to a reduction in VAT revenue collected by the UK government. The exact figure is difficult to predict without a detailed analysis of children's clothing sales and school uniform purchases, but it will represent a significant loss in tax revenue.

Groups Affected

The bill will primarily affect:

• Families with children: They will benefit from lower costs of clothing and school uniforms.
• Retailers selling children's clothing and school uniforms: They will need to adjust their pricing to reflect the VAT changes.
• Schools: They may need to adjust their processes for selling uniforms.
• The UK Treasury: They will experience a decrease in VAT revenue.

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