The Government has backed down on its plans to levy Value Added Tax at the standard rate on the sale of caravan holiday homes.
Instead of the tax hike in October this year from zero to 20 per cent announced in March’s Budget, the Treasury has confirmed that ‘static’ caravans will be VAT rated at five per cent from April 2013.
The original proposal triggered the biggest back-bench rebellion of MPs since the Government came to power. It would have added £6,000-£8,000 to the cost of an average caravan holiday home.
The latest development means an increase of £1,500-£2,000. Removable items in a ‘static’ will continue, as in the past, to be charged at a VAT rate of 20 per cent.
New holiday caravans are typically priced from £15,000, with the average cost being £30,000-£40,000. The proposed VAT increase will also apply to leisure lodges, which can cost well over £100,000, but not to residential park homes.
Commenting on the Government climb down, National Caravan Council director-general John Lally, said: ‘The NCC and BH&HPA [British Holiday & Home Parks Association], working together, put forward compelling evidence which clearly showed the potentially devastating effect this tax would have had on an industry that is crucial to the well-being of both domestic tourism and of British manufacturing.’