The 5% rate of VAT on sanitary products – referred to as the “tampon tax” – was abolished in the UK from 1 January.

A zero rate of VAT applying to women’s sanitary products has come into effect today (1 January 2021).

The move honours a government commitment to scrap the tax and is part of a wider strategy to make sanitary products affordable and available for all women which includes:

• January 2020’s roll out of free period products for all young people in English state schools and colleges and extension of the scheme into 2021
• the NHS offering period products to every hospital patient who needs them (including long-term in-patients) since 2019
• the Tampon Tax Fund, established in 2015, which allocated the funds generated from VAT on period products to projects supporting vulnerable and excluded women and girls

The Chancellor announced that the tampon tax was to be abolished from 1 January 2021 at March 2020 Budget. As the transition period ended on December 31st, the UK is no longer bound by the EU VAT Directive which mandates a minimum 5% tax on all sanitary products.

While the UK was a Member State of the EU, the country was unable to apply any rate of VAT lower than a reduced rate of 5% to sanitary products because of the EU VAT Directive. Although the UK was bound by the EU VAT Directive, Parliament approved the move to a zero rate, with a provision included in Finance Act 2016 for such an eventuality. As the zero rate was legislated for in the Finance Act 2016, it enabled the change to come in to force as soon as the UK had discretion to do so under its legal obligations.

The UK also established the Tampon Tax Fund in 2015 to donate money to charity equivalent to the amount of VAT revenue collected, with £47 million donated since then to charities working with vulnerable women and girls. The Tampon Tax Fund will continue to provide funding for projects supporting vulnerable women and girls. Successful applicants to the £15 million funding for 2020/21 were announced last month.

This article first appeared in My Taxes Plus.

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