Following the 2023 Spring Budget, we have noted some of the VAT measures which will be affected.

Drinks Deposit Return Scheme

When sales are made, which are within the scope of a relevant deposit scheme, no VAT will be charged in relation to the deposit amount.

VAT will be due on any unreturned deposits by the initial seller of a deposit scheme product. The detailed rules will be set in secondary legislation in due course.

Under the Deposit Return Scheme, deposits are charged at each stage of the supply chain, such as the manufacturer or importer, and then on subsequent sales by wholesalers and retailers. The deposit is refunded when the drinks container is returned, so this new measure is designed to simplify the VAT accounting for deposits.

Services supervised by pharmacists

With effect from 1 May 2023, the VAT exemption for healthcare services will be extended to include services carried out by staff directly supervised by registered pharmacists in the UK.

Medicines dispensed on prescription

The zero-rate of VAT on medicines dispensed on prescription will be extended to medicine supplied through Patient Group Directions (PGDs). This measure will be introduced at some point in Autumn 2023.

DIY Housebuilders scheme

People building their own homes, or converting non-residential buildings into buildings to be used as their private residence, have been entitled to reclaim the VAT they incur on the conversion work. This scheme is to be digitised, but perhaps more importantly, the time limit in which a claim can be made on completion of the work is being extended from three months to six months. This time limit has been rigidly enforced in the past, so this extension is welcome.

If you have any queries on the above, or on VAT issues in general, please contact Phil Salmon, Partner and Head of VAT.