Bicycles: VAT
The question
To ask the Chancellor of the Exchequer, if she will make an assessment of the potential impact on bicycle sales of the removal of VAT on (a) pedal and (b) electric bicycle.
Answered by James Murray
VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. Tax breaks reduce the revenue available for vital public services and must represent value for money for the taxpayer.
One of the key considerations when assessing a new VAT relief is whether the cost saving is likely to be passed on to consumers. Evidence suggests that businesses only partially pass on any savings from lower VAT rates. The Government has no current plans to zero-rate VAT on pedal and electric bicycles, but keeps all taxes under review.
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