This update contains a list of the goods and services that are currently subject to the lower 5% rate.
1. Electricity – The supply of electricity for domestic or for non-business use by a charity is usually supplied at the reduced rate. On supplies used solely for business purposes, VAT will usually be charged at the standard rate.
2. Children’s car seats, booster seats and booster cushions – There are special rules for systems such as a pram / safety seat combinations. The VAT liability would usually have the safety seat reduced-rated and the pram element standard-rated.
3. Smoking cessation products – The introduction of the 5% reduced rate for the sale of ‘over the counter’ smoking cessation products such as nicotine patches and gum came into effect on 1 July 2007 to coincide with the introduction of the English smoking ban. Similar products dispensed on a prescription remain zero rated.
4. Sanitary protection products
5. Installation of mobility aids for the elderly
6. Land and property – Under this provision, where an existing residential property is renovated that has not been lived in during the 2 years immediately before the building work commences can be supplied at the 5% rate. When the rate was first introduced in 2001, properties had to be empty for at least three years to qualify for the relief. The qualifying criteria was reduced to two years from 1 January 2008 to encourage greater use of the relief.
7. Energy saving materials – The supply of certain energy saving materials permanently installed in residential or charity premises are covered by the reduced rate. The reduced rate applies whether or not the installation is grant-funded and includes the price of the goods themselves.
If you have any VAT queries please do give us a call.
Lesley Malkin, Audit Partner