Overview

This bill aims to expand the current Value Added Tax (VAT) exemption on children's clothing and school uniforms in the UK. It proposes raising the age limit for VAT-exempt children's clothing and adding specific school uniform items to the list of exempt goods.

Description

The Children's Clothing (Value Added Tax) Bill seeks to amend the Value Added Tax Act 1994. Key changes include:

Expanding the Definition of Children's Clothing:

The bill will increase the age limit for VAT-exempt children's clothing from its current unspecified age to children under 18. The Treasury will define "clothing and footwear designed for children under 18," considering average children's measurements and allowing for future adjustments based on changes in these measurements.

Zero-Rating School Uniforms:

The bill introduces a new VAT exemption category for articles designed as school uniforms. This exemption will apply if the uniform items (a) bear the school logo or insignia, (b) are sold by or through the school, or (c) are sold in a manner prescribed by the Treasury. The definition of "school" will include those defined under the Education (Guidance about Costs of School Uniforms) Act 2021, along with other establishments as determined by the Treasury.

Implementation:

The bill applies to England, Wales, Scotland, and Northern Ireland and is scheduled to come into force on April 1st, 2026.

Government Spending

The bill is expected to reduce government revenue due to the loss of VAT income from sales of children’s clothing and school uniforms. No specific figures on the projected reduction are included in the bill.

Groups Affected

• Parents and Guardians: Will likely benefit from lower costs of children's clothing and school uniforms.
• Children: Will directly benefit from the potential cost savings on clothing and school uniforms.
• Retailers: Will experience changes in pricing and sales due to the VAT exemption changes.
• Schools: May see increased demand for uniform items if schools are directly involved in sales.
• HM Treasury: Will be responsible for defining specific criteria for the exemptions and may experience a reduction in tax revenue.

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