Question to the HM Treasury:

To ask His Majesty's Government what assessment they have made of (1) the average expenditure on VAT by private, voluntary and independent childcare providers, and (2) the cost to the Treasury of zero-rating those childcare providers.

VAT has been designed as a broad-based tax on consumption, and the twenty per cent standard rate applies to most goods and services. Exceptions to the standard rate have always been strictly limited by both legal and fiscal considerations.

Ofsted-registered nurseries and childcare providers are exempt from VAT. This means they do not have to charge VAT to their customers, but it also means they cannot recover the VAT they incur on the things they buy.

We do not hold data on irrecoverable VAT expenditure as businesses are not required to report this information to HMRC in their VAT returns.

While we keep all taxes under review there are no plans to make changes to the VAT exemption which nurseries currently enjoy. Representations on changes to the VAT system will be considered through the normal fiscal event process.