Overview

This bill proposes to amend the Value Added Tax (VAT) Act 1994 to allow the Secretary of State to exempt certain goods and services from VAT. These exemptions would apply to goods and services deemed beneficial to the environment, health and safety, education, or charitable purposes.

Description

The bill adds a new section (31A) to the VAT Act 1994. This section empowers the Secretary of State to issue orders exempting specific goods or services from VAT if they meet the criteria of environmental benefit, health and safety improvement, educational value, or charitable purpose. The Secretary of State can create different exemptions for different situations and include transitional provisions. The bill also amends section 97 to include these new orders within the existing regulatory framework. The Act will apply across the UK and come into force upon being passed.

Government Spending

The bill is expected to reduce government revenue from VAT. The exact figure is uncertain as it depends on the specific goods and services exempted by the Secretary of State's future orders. The reduction in VAT revenue will be offset by other government tax revenue streams.

Groups Affected

Groups potentially affected include:

• Businesses supplying goods/services benefiting the environment, health and safety, education, or charities: These businesses could see a reduction in their VAT liability, potentially leading to increased profits or lower prices for consumers.
• Consumers: Could benefit from lower prices on goods and services, if the VAT exemption is passed on.
• The UK Treasury: Will experience a reduction in VAT revenue.
• Charities: Potentially see a reduction in their costs related to VAT on purchases.

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