As children across the UK are taking their final school exams, many of their families must be delighting in the fact that the cost of school uniforms is coming to an end.
We’ve recently been asked about VAT on children’s clothing, so here’s a brief summary of what’s what.
What are the current rules?
Clothing and shoes for young children are charged at zero rate VAT. But for older children – or those that are taller than average, school uniforms attract the full standard VAT rate of 20% – the same as for all other clothing and shoes.
One problem that’s been identified is that there is no definition of the term “young children” in VAT law. Surprisingly, the 0% VAT threshold is based on how big an average child will be on their 14th birthday. So clothes for older or larger children are taxed – including their school uniforms.
Why can’t we scrap VAT on school uniforms?
If you think it’s unfair, this is HMRC’s reasoning… If VAT was scrapped on school uniforms, it’s possible that some adults would start wearing it to take advantage of ‘the saving.’
Over the years thare have been viable proposals for VAT exemption, such as that items of school uniform that can be clearly identified as being from a school due to the inclusion of a logo could be exempt from VAT. This was not supported by the Government at that time, but it was several years ago, so maybe it’s time for another go?!
If a school is only for pupils under age 14, the zero rate can be applied however large the clothes are, as long as they include the school’s logo. The same applies for organisations such as Cub Scouts or Brownies that are run for children under 14.
And after Brexit…?
Might Brexit resut in a change in policy? EU countries co-ordinate VAT rates to make sure there is no unfair competition across national borders – but this, of course, may now change in due course. At the moment, our VAT rate is 20%, but EU rules mean we could actually reduce the standard rate to 15% now, if the government wanted to. However, if we wanted to include school uniforms in the list of goods taxed at 0%, we would currently need the agreement of all other EU countries to do so.
If you have queries about any aspect of VAT, please get in touch…