Latest news

Latest news:

The mysterious world of zero-rates of VAT

October 28, 2015

More than 250,000 people have called on the government to “stop taxing periods” and reduce the 5% rate of VAT on sanitary items such as tampons. The government says it cannot scrap the VAT because of EU law, although the European Commission has responded to the row by saying that a review of the VAT rules will take place in 2016.

“It is absurd that while men’s razors, children’s nappies and even products like Jaffa Cakes, exotic meats and edible cake decorations are free from VAT, women are still having to pay additional costs on what is already an expensive yet vital product,” said SNP MP Alison Thewliss.

The list of products with zero-rates of VAT is extensive. Men’s razors are not one of them despite claims to the contrary. They are subject to the standard rate of VAT at 20%. But products from Marks and Spencer’s teacakes to bicycle helmets are included on the list so why are some vital items like tampons being left out?

It goes back to the 1970s, explains David Wilson, a technical director at RSM. VAT replaced the UK’s tax scheme when the country joined the European Economic Community. “When we joined we already had zero-rates on things like food and transport,” says Wilson.

Source: http://www.bbc.com/