1st Friday
Tax Chat

Behind the headlines – the real story behind the ‘tampon tax’

Behind the headlines – the real story behind the ‘tampon tax’

As you may have seen in the press, the so-called ‘tampon tax’ has been getting quite a bit of attention recently.

It concerns the rate of VAT payable on women’s sanitary products (currently 5%). The Chancellor has come under pressure to reduce the VAT on these products to 0%. Unfortunately, under the terms of our current agreement with the EU, the UK is not permitted to do this.

So, as an interim measure, the Chancellor has decided to ring-fence tax collected on these products and use it to help fund a number of women’s charities. For now, that’s probably the best he can do.

What was really interesting, however, was the comment that this is only a temporary measure and that the issue is to be taken up with Brussels in an effort to try and get the zero rate extended to these products. This is a huge step forward compared to the actions of previous chancellors who simply stonewalled whenever zero rating was mentioned.

This could be the catalyst for a fundamental review of the UK zero rating provisions. If that happens, there will likely be winners and losers. However, a radical review is long overdue as the current provisions are from “a long time ago in a galaxy far away” (aka the 1970s!).

Watch this space…

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