Static Caravans and VAT
If you’re paying for something it’s nice to know exactly what it is you’re paying for, and holiday caravans are no exception to this rule. Recent taxation reforms in relation to VAT have caused some confusion in the static caravan world.
What tax rate applies to static caravan sales? What about site fees? Should I be paying council tax?
These are all questions which require definitive answers; definitive answers that aren’t always easy to find. We aim to provide them.
Static Caravan Sales
After much political wrangling last summer, the static caravan industry and the government were finally able to agree on a negotiated tax rate of 5% applied to static caravan sales. This rate will came into force in April 2013.
The government had originally announced plans to apply the standard VAT rate of 20% to sales of static caravans, starting in October 2012. However, these plans were met with outrage by representatives of the static caravan manufacturing industry, who claimed that the proposed rate of tax would cripple business and severely damage sales.
Caravan manufacturers projected that this jump in tax would result in a 30% dip in profits as well as a loss of 1,000 jobs in the manufacturing sector alone. They vowed to fight the tax increase every step of the way, eventually succeeding in reducing the increase to just a quarter of what was proposed, as well as delaying it by six months to give the industry time to adjust.
Site fees are nice and easy. You pay a standard rate of 20% VAT on site fees. However, the VAT rates on the water, sewerage and utility bills that affect your pitch make things slightly more complex.
If the water supply and sewerage services to the pitch are individually metered then you will pay no VAT at all on either service. If the services are delivered to you via a central source, shared by the rest of the caravan site and not metered individually, then you will pay standard VAT rates on the charges.
If your caravan is used as a holiday home and individually metered, VAT on utilities such as gas and electricity will be charged at 5%; if these utilities are not individually metered the VAT will be charged at the current standard rate of 20%.
Working out the council tax on your holiday caravan is similarly straightforward. Council tax does not apply to your static caravan if you use it simply as a holiday home.
Hopefully this guide has helped you answer any tricky questions you may have had relating to VAT and taxation on your holiday caravan. If you think we’ve missed anything or need any further clarification please get in touch via our contact us page
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(Please note: This guide is for advisory purposes only. All information correct as of 10/11/12.)