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VAT and duties changes in the Spring Budget


Published: 16 Mar 2023 Update History

Find out more about changes to rates, DIY housebuilder claims and the VAT healthcare exemption.

In an attempt to ease pressure on GP services, the Chancellor will extend the VAT exemption on healthcare from 1 May 2023 to include medical services carried out by staff who are directly supervised by registered pharmacists. The zero rate on prescriptions will also be extended to medicines supplied through patient group directions. This allows some health professionals to administer specified medicines to a pre-defined group of patients, without them having to see a prescriber. 

Regarding possible future changes to VAT, the government published a call for evidence on options to reform VAT relief for the installation of energy saving materials in the UK.  

The government also committed to continue working on simplifying the VAT treatment of financial services. Its response to the consultation on fund management reform will be published in the coming months. 

Legislation will be included in Spring Finance Bill 2023 to make some minor technical corrections to the interest and late payment rules for VAT, to ensure they are charged as intended. 

As expected, the government confirmed its position on the VAT treatment of deposits charged under a deposit return scheme for drinks containers, such as the one launching in Scotland on 16 August 2023. Legislation will be laid to ensure that VAT will only be due on unredeemed deposits.  

Finally on VAT, the government announced legislation to digitalise the DIY housebuilders’ scheme. The time limit for making claims will also be extended from three to six months. No timeframe has been announced for when this will be introduced. 

The Budget also included a range of measures to simplify customs processes, including changes to customs guarantees, improvements to the simplified customs declarations process, and transit policy simplifications. Several consultations are expected in this area over the course of 2023. 

Fuel duty is frozen for the next twelve months, including maintaining the current 5p reduction.  

Draught relief is increasing from 1 August 2023 to keep alcohol duty on beer served in a pub 11p per pint lower than that sold in a supermarket.  

Duty rates on all tobacco products will increase by RPI plus 2%, with an additional 4% increase on hand-rolling tobacco.  

The plastic packaging tax rate will increase in line with CPI from 1 April 2023, from £200 per tonne to £210.82 per tonne.   

Spring Budget 2023

On 15 March 2023, Chancellor Jeremy Hunt delivered the Spring Budget. Read ICAEW's analysis and reaction.

London Westminster
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