VAT and other indirect taxes changes in 2024

VAT and other indirect taxes changes in 2024

2024 has been a busy year for indirect taxes already, with many changes in legislation, policy change, and case law. We are here to make it easier for your organisation to navigate these complex changes, whether in the UK or globally. No matter the VAT or indirect tax challenges you are facing, we have the expertise and knowledge to help.


Register for our VAT and Customs training workshops

Our VAT and Customs training programmes will help your organisation proactively manage its tax position. We deliver live and interactive training either virtually or face to face depending on your preference.

Book VAT Training

Book Customs Training

Confirmed legislative and policy changes  

Extension to VAT Zero Rate on Women's Sanitary Products

In January 2024, the existing zero rate relief on women's sanitary products was extended to include reusable period underwear. The products must meet certain tests to qualify.

REULA – Finance Act 2024

Starting from 1 January 2024, the Interpretation of VAT and excise legislation is affected by the Retained EU Law (Revocation and Reform) Act 2023 (REULA). REULA ends the supremacy and special status afforded to retained EU law. It also confirms that UK legislation for VAT and excise can no longer be disapplied on the basis that it is incompatible with retained EU law.

Customs Duty Waiver Scheme

In January 2024 the Government increased the maximum value of duties that can be waived over three tax years for 'at-risk' goods moved into Northern Ireland from €275,000 (~£235,000), up from €200,000 (~£170,000).

First milestone of Windsor Framework introduced

From 31 January, goods moving directly to Great Britain from Ireland have been subject to the full customs regime.

Also from 31 January, there have been changes to the health certification needed for medium risk animal products, plants, plant products, and high-risk food and feed of non-animal origin from the EU.

These changes mark the first major milestone in the introduction of a full “green lane” between Great Britain and Northern Ireland.

Cross-Border Electronic Services of Payment (CESOP)

CESOP is a new EU regulation that took effect on 1 January 2024 and first returns are due by 30 April 2024. It mandates that Payment Service Providers (PSPs) report payment transactions where the payer is located within the EU and the payee is based in a second country (whether in or out of the EU). Read more in our article here.

Carbon Border Adjustment Mechanism (CBAM) in the EU and UK

For the period from 1 October 2023 to 31 December 2023, businesses importing into the EU must know and record the carbon footprint of their products. Quarterly reporting is required and the first reporting deadline fell due on 31 January 2024. Read our article on the new legislation here.

The Government has announced plans to introduce a UK CBAM from 1 January 2027. This levy will apply in certain circumstances to relevant goods imported in the aluminium, cement, ceramics, fertiliser, glass, hydrogen and iron and steel sectors.

Energy Saving Materials – More technologies and works in scope

The government extended the zero-rated relief (until 2027) for energy-saving materials to battery storage, water-source heat pumps and diverters retrofitted to ESM’s. Also, there will be a relief for specified necessary groundworks in heat pump installations, including by subcontractors.

The government will also re-introduce a relief for energy-saving materials installed in buildings used solely for a relevant charitable purpose. This relief was previously removed at the request of the EU.

Customs Declaration Service (CDS) Exports Timeline

The Customs Declaration Service (CDS) is scheduled to replace the Customs Handling of Import and Export Freight (CHIEF) system from 4 June 2024. While the official original deadline for the use of CDS for Exports remains as 30 March 2024, declarants will have until 4 June 2024 to migrate fully after which CHIEF will no longer be open for export entries.

Plastic Packaging Tax

Effective from 1 April 2024, the Plastic Packaging Tax rate will rise from £210.82 to £217.85 per tonne.

VAT Registration Threshold increased

The government has announced that, for the first time in seven years, it will increase the VAT registration threshold. The threshold goes from £85,000 to £90,000, and the deregistration threshold from £83,000 to £88,000.

VAT Treatment of Private Hire Vehicles – Upcoming consultation

The government has announced a consultation in April 2024 into the impact of the July 2023 High Court ruling in Uber Britannia Ltd v Sefton MBC. This ruling requires operators to act as principal in supplying taxi services outside London.

This has the potential to impact the VAT position of operators, many of whom currently apply agency arrangements on behalf of largely non-VAT registered drivers.

End of VAT margin scheme for Cars in Northern Ireland

Motor vehicles sold in Northern Ireland after 30 April 2024 can no longer use the VAT margin scheme and VAT will need to be accounted for on the full selling price of the vehicle after this date. Read our Q&A - Automotive: a taxing environment driven by challenges article.

Second milestone of Windsor Framework introduced

From 1 May 2024, the second major Windsor Framework milestone impacting trade between GB and NI will be introduced meaning there will be documentary and risk-based identity and physical checks on medium-risk animal products, plants, plant products, and high-risk food and feed of non-animal origin from the EU. Additionally, inspections of high-risk plants/plant products from the EU will move from destination to Border Control Posts and there will be a simplification of imports from non-EU countries, including removal of health certification and routine checks on low-risk animal products, plants, plant products from non-EU countries.

Further Windsor Framework changes

A new system for parcel movement will be in introduced to ensure consumers can send and receive parcels as they currently do. The "green lane" arrangements for freight movements will also apply to parcel consignments between businesses.

Final milestone of Windsor framework

The final stage of the Windsor Framework is introduced. Safety and Security declarations will be required for imports into Great Britain from the EU or other territories where the waiver applies.

Additionally, there will be a reduced dataset required for imports, with the UK Single Trade Window aiming to eliminate duplication across pre-arrival datasets.

Trader Support Service (TSS) Extension

HMRC has confirmed the extension of the Trader Support Service (TSS) until 31 December 2024. Businesses who rely on TSS should plan for the possibility the service will not be further extended.

Beyond 2024

The government has announced an extension by a further 6 months to the six-month freeze on alcohol duty, until 1 February 2025.

VITDA implementation is expected to be delayed until 2025. Read our digital age VAT in the EU – reforms on the way article.

The government has announced that it is freezing fuel duty rates for 2024-25. The temporary 5p cut in fuel duty rates will be extended until March 2025. The government has also announced that, following review, it will maintain the difference between road fuel gas and diesel duty rates until 2032.

Likely policy developments

There are expected to be changes in current Gaming Duties with Remote Gaming Duty, General Betting Duty and Pool Betting Duty expected to become a new single tax. Guidance following a Supreme Court case is anticipated.

The government has announced proposed amendments to the VAT Terminal Markets Order (TMO). The TMO is a revenue-neutral tax simplification measure for certain wholesale commodity transactions made by members on named commodity exchanges or market associations, called “Terminal Markets”, where certain supplies can be zero rated.

The government plans to update the underpinning TMO legislation to allow for further reform including bringing trades in carbon credits within the scope of the TMO.

The government has announced a consultation into a proposed new levy on vaping products from 1 October 2026. The consultation implies that such a levy will apply at the import or UK manufacturing stage. This is similar to the regime announced for the planned Deposit Return Scheme and there would be processes to ensure credits and drawbacks of duty would apply. The government will also introduce a one-off tobacco duty increase of £2.00 per 100 cigarettes or 50 grams of tobacco at the same time.

HMRC have previously released guidance on the VAT treatment of EV charging and the ability of VAT registered organisations to recover VAT on such costs but have promised further clarification of policy which may be provided in 2024. In the absence of specific guidance, organisations may wish to seek other ways of obtaining comfort on the VAT recovery position for any EVs they have.

Despite much lobbying, the government did not announce the re-introduction of tax-free shopping as part of the March Budget. The government has received analysis by the Office for Budget Responsibility (OBR) and will consider those findings alongside industry representations and broader data. The government says it welcomes further representation on this relief.

Significant case law

The First Tier Tribunal decision regarding serviced accommodation and the application of the Tour Operators' Margin Scheme is being appealed by HMRC and is expected to be heard in 2024. The appeal could have a significant impact on those in the travel and accommodation sector.

TOMS is a complex area for VAT and often causes a great deal of confusion. We can help to review the applicability of TOMS for those businesses in the travel and tourism sectors. Some businesses may be in a position to submit protective claims considering the recent litigation in this area.

HMRC’s appeal in respect of the recent Bolt Services decision on the Tour Operators Margin Scheme (TOMS) has been accepted. We expect to see further litigation on this matter.

This case addresses the VAT implications of de-grouping liability and could have a significant impact on those making intra-VAT group supplies. The appeal is expected to be heard early in 2024.

This high-profile case focuses on the recoverability of VAT incurred on professional fees connected to a share sale and could have implications for many other organisations who have undertaken similar transactions. The appeal is due to be heard in 2024. Read our VAT recovery on deal costs – selling shares to fund ‘downstream’ taxable activity article.

Key Contacts

Contact us