In today’s autumn statement and spending review, Chancellor George Osborne has pledged to press the EU to changes the rules about VAT rates on women’s sanitary protection, saying that until VAT is abolished, the UK government will use the money raised to fund good causes
The current EU VAT rules mean that the UK cannot take an arbitary decision to remove VAT although it charged the lowest rate possible in the UK.
Osborne said that 300,000 people had signed a petition calling for no VAT on sanitary products, which are currently subject to 5% VAT. Saying that the EU made it impossible to reduce the amount further, Osborne said he was ‘committed’ to changing the EU rules.
‘Until then, the £15m raised through the tampon tax will be given to women’s health charities,’Osborne said.
The Chancellor named the first beneficiaries under the scheme, which will operate in a similar way to the fines for the Libor manipulation levied on banks. He also invited suggestions for other charities which could benefit.
‘Zero rating of women’s sanitary products will require a unanimous agreement of all EU member states and this may not happen,’ says Alan Pearce, VAT partner at Blick Rothenberg LLP.
‘The EU can’t agree on much bigger VAT issues so I can’t see this happening for some years – if at all. The UK already apply the reduced rate of 5% VAT to such products.’
