Amongst all the Jubilee celebrations, you might have noticed a news story late last week about the government’s intention to take a ‘U-Turn’ on their plans to increase the VAT on static caravans to the standard rate of 20%. The changes will affect all of the camping industry and whether you’re interested in static caravans, motorhomes or campervans, it’s important to know what’s going on.
VAT and Purchases
The first thing to be clear on is that VAT only affects you if and when you purchase a new motorhome or caravan. VAT should be differentiated from road tax (or duty), which is paid every year, and, as such, the changes won’t affect you unless you’re thinking of buying something new in the near future.
What are the New Rates?
Static caravans, the current area of contention, will be charged at 5% VAT from April, with motorhomes and campervans remaining at their current standard rate of 20%. All fixtures and fittings for motorhomes, campervans or static caravans will also be charged at 20%, which means there’s no tax advantage to be had from buying furnishings from static caravans.
What is a Static Caravan?
The definition of a static is where there are contentious areas. A static caravan is defined formally as designed for year-round occupation and this definition does include some vehicles which are not static as such; demountables and large tourers will qualify for the 5% VAT. A good indicator is to check the sort of motorhome insurance policy you use; most will include cover for road accidents which will not be applicable to static caravans.
If you’re unsure the VAT you need to be paying on a new purchase then it’s really worth getting your head round the rules. You can always speak to HM Revenue and Customs if you’re unclear or you think you may have been overcharged but a general rule to follow is if you couldn’t stay in your motorhome all year-round, it’s will not qualify for reduced VAT.