VAT on carrier bags in Scotland

From 20 October 2014, the Scottish Parliament is to introduce a compulsory charge on single use carrier bags set at a minimum of 5 pence. This charge will apply on single use carrier bags supplied with goods, supplied in or delivered from Scotland.  Where such a charge is made by a VAT registered retailer/supplier there will be an obligation to charge VAT on the income received at the standard rate of VAT.

Where suppliers are liable to charge VAT, the amount they charge for a bag is tax inclusive at the standard rate of VAT. For a VAT registered business charging 5 pence, the taxable amount will therefore be 4.17 pence and the VAT 83 pence.

Suppliers using a Retail Scheme should ensure that VAT is properly accounted through their scheme. Also, non-VAT registered suppliers must still charge the same minimum amount of 5 pence

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