VAT Tax Hike For Caravan Owners Starts 2012

06 Jan 2011

Many caravan owners currently enjoy VAT free water and sewage bills. This tax concession benefits around 300,000 caravan owners in the UK but it is being stopped in January 2012.

The change is being made to put the UK in line with EU regulations. The average cost change for those effected will be approximately £100 per year, earning Her Majesties Revenue and Customers £3 million per annum.

Water, sewage and bills for first time connection to utilities were previously zero rated for caravans but this will end next year. Representatives from the UK holiday industry have said that the changes are an unwelcome change that will be an administrative burden and an unneeded extra cost for the holiday industry.

The government take the opposing view that caravanners have merely had a fortunate break up until this point and are now having to pay the same charges as everyone else.

Some purchases of boats will also be affected. Boats that are purchased by UK residents for use outside of the UK will now also be liable for VAT payments, unless the manufacturer takes the boat to the non-EU destination. The luxury yacht market often operates by customers purchasing boats and then sailing them to the desired location. This is no longer acceptable unless the full rate of VAT is paid on the purchase.

Proposed green taxes that may well come into force within the near future will also see a further onus placed on the caravanning industry. It is probable that the government will choose to raise taxes on fuel in the near future resulting in petrol prices rising above £1.50 per litre. This percentage increase will hopefully not dampen the UK holiday industry.

Many more people have been turning to the UK countryside as a way of saving money on what have now, thanks to higher plane ticket costs and poor exchange rates, become expensive foreign holidays. But it will mean a noticeable additional cost for those that are looking to travel across the country and it may result in higher use of more local facilities rather than ones at the end of long journeys.

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