Asked by: Allison Gardner (Labour - Stoke-on-Trent South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential merits of removing VAT from veterinary care.
Answered by James Murray - Exchequer Secretary (HM Treasury)
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 public services, and must represent value for money for the taxpayer.
At Autumn Budget 2024, the Government took a number of difficult but necessary decisions on tax, welfare, and spending to fix the public finances, fund public services, and restore economic stability. This stability is critical to boosting investment and growth, and to making people across the UK better off.
One of the key considerations for any potential 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, meaning that cutting VAT may not be an effective way to reduce prices for consumers.