Overview

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

Description

The bill introduces a new section (31A) to the VAT Act 1994. This section empowers the Secretary of State to issue orders exempting specified goods and services from VAT if they are deemed beneficial to the environment (a), health and safety (b), education (c), or charitable purposes (d). The Secretary of State can create different exemptions for different situations and include transitional provisions. The bill also amends section 97 of the Act to include these new orders within the list of permissible regulations. The bill applies to England, Wales, Scotland, and Northern Ireland and comes into effect upon passage.

Government Spending

The bill is expected to reduce UK government revenue from VAT. The precise financial impact will depend on the specific goods and services exempted and the volume of sales involved. No figures are currently available as the specific goods and services are yet to be defined.

Groups Affected

Groups potentially affected include:

• Businesses supplying goods/services beneficial to the environment, health, safety, education, or charities: These businesses would experience a reduction in their VAT liability, potentially increasing profitability and competitiveness.
• Consumers: Consumers purchasing the exempted goods and services would see lower prices due to the reduced VAT.
• The UK Treasury: The Treasury will receive less VAT revenue, requiring potential adjustments to budgets or taxation elsewhere.

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