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. VAT can be a very confusing topic – especially when it comes to the sale of a static caravan. We will try to keep this information as simple as possible. There are three different factors that will impact the amount of VAT that will be liable:
Standard rate (20%)
Reduced rate (5%)
Zero rate (0%)
Here are three examples on how these tax brackets could affect you:
A small caravan that does not exceed 7 meters in length and 2.55 meters in width is subject to the standard rate of 20%.
Any static caravan that exceeds this and is not manufactured to the British standard BS3632:2015 is subject to the reduced rate of 5%.
If a Static caravan exceeds the dimensions above and is manufactured to the British standard BS3632:2015, it will benefit from the zero rate of 0%.
Static Caravan Sales
When it comes to static caravan sales there are a few things that need to be considered. After much political wrangling, the static caravan industry and the government were able to agree on a negotiated tax rate of 5% applied to static caravan sales. This rate came into force in April 2013.
If you are buying a second hand static caravan that was occupied prior to April 2013 then we have some great news! You are able to benefit from a zero rate if the static caravan meets British standards and exceeds 7 metres in length and 2.5 metres in width.
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.
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 or on Facebook and Twitter.
(Please note: This guide is for advisory purposes only. All information correct as of 30/04/2021.)