Tax after Brexit: Scrap VAT on all school uniform
Outside of the EU, the UK will be far freer to streamline its tax system and make it better for the situation the country finds itself in. Matthew Easter argues the UK should take advantage of Brexit, and Scrap VAT on all school uniform
VAT occupies a controversial place in our country. There are many who feel that it is an onerous and regressive tax that has an overemphasised effect on those who are not the most well off in our society. Although everyone will be feeling the squeeze from lockdown and the Covid pandemic, families will be one of the groups most affected by both the additional financial costs of lockdown as well as the increased mental affects. As such, it would make sense to help families cope with some of their day-to-day costs.
The Schoolwear Association has recently released a major new report that calls on the government to do just that, as exempting school uniforms from VAT for all children up to the age of 18 would reduce the burdens on families. School uniforms are essential items of clothing for millions of children across the country and a necessary cost for their parents. However, given that the government is helping so many across the country right now, through the furlough scheme and others, it should make this permanent change. Removing VAT will not just immediately save money for hardworking families, but it also frees them to spend, or save, that money elsewhere – potentially providing an additional boost to separate areas of the economy.
This change would not just provide some relief for harder pressed families, but it would also make a lot of sense and move the UK towards a more joined up and sensible VAT policy towards clothing. As the report notes, clothing and shoes for young children have been charged a zero rate of VAT since the introduction of the tax on 1 April 1973. VAT relief is based on the maximum size an average child will be on their 14th birthday. Therefore, based on this arbitrary calculation, clothes for older children, as well as many children under the age of 14 who are larger than average, are taxed at 20 per cent, including school uniform.
Removing this unnecessary VAT policy would be extremely popular with parents as it would decrease their household spend. Not only would it be a popular policy, now is a sensible time to make this change. Now that Britain has left the European Union it would be much easier for the Government to make this important and beneficial change.
EU countries have been co-ordinating VAT rates since 1992 to ensure there is no unfair competition across national borders. Under EU rules, countries must apply a minimum standard VAT rate of 15 per cent, but 0 per cent VAT is also allowed for the goods which were taxed at that rate before 1991. Once the transition period ends on 31 December the UK will be far freer to streamline its tax system and make it better for the situation the country finds itself in.
School uniform plays an enormously important role in schools. They are a social leveller, reduce bullying, promote pride and boost academic performance. The financial situation of many families has taken a hit because of coronavirus. Exempting VAT on school uniforms for all children until they leave school would help many families across the country and as such the government should seriously consider this as part of their upcoming Finance Bill.
