How George Osborne's new Budget will affect VAT on caravans

The Chancellor has announced a raft of changes to the way VAT is charged
The Chancellor has announced a raft of changes to the way VAT is charged

Thursday, 22, Mar 2012 11:41

by Cameron Bird and Chris Jefferies

As part of his annual Budget, Chancellor George Osborne announced various change in the tax system yesterday (March 21st), and several previously un-taxed goods including static caravans will now be hit with the standard 20 per cent rate of VAT.

This change will take place on October 1st of this year, and could also have an effect on some larger touring caravans to go along with the previously zero-rated static caravans.

A caravan that is "designed and constructed for continuous year-round occupation" will still be zero-rated, and exempt from the VAT but all other static caravans will be taxed at the standard rate, according to HM Revenue and Customs (HMRC).

Touring caravans "which are under seven metres long are already standard-rated", HMRC adds, but some of the larger models could be subject to standard taxing as well, including the Bailey Retreat.

Simon Howard of Bailey Caravans told CaravanTimes: "It may well affect the Retreat as well as some of the larger touring caravans, but we are waiting for confirmation from HMRC on this."

With a few months remaining until the new system is put into place, caravanners looking to buy a static caravan or large tourer should look to complete their purchase before October, so as not to pay the new higher rate of VAT.

HMRC estimates the new tax will impact around 50,000 individuals purchasing static caravans each year, a number that will of course increase if larger touring caravans are included as well. In total the government expects to make £45 million over the next five years from this tax.

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