In the 2012 budget, which was released yesterday, it was announced that from the 1st October 2012 VAT (Value Added Tax) will be applied to static caravans, which could make your next holiday home 20% more expensive to buy.
Previously, static caravans were in what the government has referred to as a ‘Tax Loophole’, meaning that they were 0% tax rated. The new budget will bring static caravans in line with touring caravans, meaning they will be taxed at the current VAT rate of 20%.
Labour MP Diana Johnson (Hull N) has been quoted as being against the new tax rate as it will affect the economic strength of the Hull area, where many of the UK’s static caravans are made,
“This will have a real impact on the economy in Hull because we manufacture a great deal of the caravans in this country.”
She also added that the increase in price could have a negative effect on demand for statics,
“I understand it could almost reduce demand by 30%, another hammer blow.”
If the extra cost of VAT is passed on directly by the manufacturers then parks will have to buy static caravan holiday homes at a much higher price, and this cost could be passed on to the end user.
If you’re thinking about buying a static caravan for the first time, or upgrading your current one, then it might be a good idea to do so before October 1st in order to avoid the VAT hike.
Also bear in mind that the VAT rise will affect the amount of static caravan insurance cover which you need to have in place. Whether you have cover on a “New for Old” or “Market Value” basis, should your static caravan be damaged beyond economic repair and written off, from October it will cost more to replace. This means that you need to ensure you have a “sum insured” which is adequate to cover the new retail price (which includes VAT at 20%).
We want to know your thoughts on this one: If a static caravan which previously cost £50,000 now cost £60,000 would you be put off buying it?
To view the budget in full visit the HM Treasury website.
Update (12/04/12)
Leisuredays are proud to be supporting the National Caravan Council’s bid to stop the proposed VAT rate for holiday homes. We have also written to our local MP (Linda Riordan, Halifax) and asked for her support in the House of Commons.
If you don’t want the VAT rate to come into force then there is still time to stop it by contacting your local MP and asking them to fight against it on your behalf.
So the Govt. has decided it does not want to encourage people to holiday in U.K and so boost local seasonable economies. it obviously wants to drive people abroad to spend money there.
Also alot of caravan manufacturers have gone bust in recent years and others struggled. Again this Govt. does not appear to want to encourage and support British industry and jobs. It would rather put manufacturers and employees out of work for the sake of an extra few quid in VAT. Do they care? NO.
will the vat also be charged of second hand/used static caravans or only on new ones…
Elo – It is our understanding that VAT will apply on second hand or used static caravans as well as new units.
Obviously we are still learning how the VAT is going to work in practice, but it does appear that from the 1st October 2012 a park which is selling a second hand static caravan will have to pay VAT at 20% on the sale price.
It remains to be seen whether parks will take this in to account when pricing static caravans for sale, but you would imagine that the prices across the board will rise from 1st October onwards.
Our advice is to speak to the park you are intending on buying a holiday home from and get their advice on how prices will be affected.
Neil
Leisuredays
Hi,
Do you know the implications for a private individual seller that has to process the sale through the caravan park?
David
If I sell my caravan private to my friend do I have to pay vat bearing in mind I have to pay 15 per cent to the park.
How about a “Park Home”, such as those manufactured by Stately-Albion, Omar and others, which is sold and sited on a leisure licensed site as opposed to a 12month residential site? Will they attract the 20% VAT?
Once again, Tory mentality is less than interested in the welfare of those families whose holidays are spent on a budget in this country. We make the best statics in the world and provide sites which are unequalled elsewhere. But how does this impact on the lives of those who take their money to the continent, or even to other continents? Not at all! Never mind chancellor, just take yourself elsewhere with your millionaire cabinet chums.
David – It shouldn’t really affect the sales process too much. Our advice would be to speak to your park and see how they will process the sale.
Peter – It is our understanding that Residential Park Homes are not currently Vatable. The new VAT rating should only affect holiday homes, not residential units.
Neil
Leisuredays
Note: The above reply has been edited after advice from The National Caravan Council which stated Park Homes are not Vatable. Apologies for any misunderstanding.
The so called “loop hole” which existed thus far has helped to promote an industry which is not only good for families and their holidays in the U.K. but also for the towns and communities in which holiday parks are situated. Well managed and well run parks provide huge levels of employment and income to towns and villages which would otherwise not be forthcoming. It’s concerning that a government which wasn’t voted for by a single person (no one voted for a coalition) can be the font of so many “back of a cigarette packet” initiatives. A cabinet filled with so many millionaires from privileged backgrounds can hardly understand the needs of those less fortunate.
Some people can’t afford to buy a house so the next best thing is to buy a static caravan or park home, so a 20% increase means that even that option is being taken away from people to be able to have their own home even if it means its on a small scale. It is also sad that they want to cripple the job market once again by making it harder for manufacturers to keep in business. Times are already hard enough as it is without the government taking more and more from people.
Having enjoyed many caravan holidays over the last 50 years my husband and I bought our static caravan in 2006 on a site which is open 8 months of the year. With site fees and council tax, this isn’t a cheap option and we could have at least two holidays abroad for that amount. However, we have always chosen to holiday in the UK and the government should be encouraging more families to do so. We are fortunate in being on a site which allows an initial ten year conract with annual renewal for a further ten years, providing the ‘van is kept in good order but some owners like to trade up every five six or years, thus keeping the manufacturers in business. An extra 20% on the price could be prohibitive.
That’s me selling I’m due to upgrade and haven’t budgeted for another 20% we holiday here to keep British ppl in jobs and now my family won’t b able to afford to thanks for nothing u non thinking rich cats
I’m was wondering why if statics were 0% vat that when you look at the pricing on the manufacturers sites like Pemberton there’s Vat added to the price.
So if I have enough money to buy a bricks and mortar holiday home I pay 0% VAT. If I am on a lesser budget and buy a static caravan I will now have to pay 20% VAT. Enough said about this government’s plans.
Does the VAT only affect Caravans purchesed in the UK? sorry if it appears a dumb question! We are looking at purchasing a Caravan from a firm in France to home on a French site.
Another bit of stupidity by this short sighted Government. They spend thousands on advertising ‘Holidays in Britain, why go abroad’? Then they come up with is!
Organising drinks in brewery’s certainly springs to mind.
Don’t they realise that most of these holiday homes are bought and owned by the older generation. Yet another kick in the ‘you know whats’. The holiday home leisure industry is going to suffer BIG TIME if they do go ahead with this.
Angry from Lincoln.
Lynn – VAT only affects caravans purchased in the UK so if you intend on buying a unit in France and siting it there then it would be subject to French taxation laws. (However if you wanted to buy a holiday caravan from France and have it shipped over to the UK then you would be subject to import tax).
Mr C – I think your centiments are similar to how a lot of people view the proposal of this new VAT rate. We are fighting against the new VAT rate alongside the NCC so hopefully the government will listen. If you want to help in the fight against the new rate then we’d urge you to get in touch with your local MP and ask for their backing in Parliament, as we have done with ours.
thanks for everyone’s comments,
Neil
Leisuredays
This issue seems to be gaining the attention of the big news outlets now, and even the BBC are talking about it which can only be a good thing for piling pressue on the government to reverse their proposal.
There’s an interesting little feature on static caravans and VAT on the BBC Radio 4 “You and Yours” show here which people might like to listen to:
http://www.bbc.co.uk/iplayer/episode/b01g62pk…
The bit to listen to is from 13.12 to 20.06 so only about 7 minutes.
thanks
Neil
Leisuredays
This has been a bubbling issue for some time. A static caravan has enjoyed the same rule a house because it has been classified as a holiday “home”, and not the luxury it really is.
It would be prudent for the government to re-assess their intended actions on this already fragile industry, as so to protect supply and manufacturing, as well as tourism.
To cushion the impact, it may be wiser looking at the overall scenario, and either limiting VAT to 10% or scaling it in at 5% yearly increments.
Thanks for the reply to my Question! It is for the Caravan purchased in France to stay in France.
If you have already paid VAT on a new static caravan from 1st October 2012 and later you sell on. How is it that if you have already paid VAT on the new caravan how is it possible to pay VAT on a used/ second hand van, that would mean you paying VAT twice. I know of no other product where this would happen eg: If I buy a new car and sell it to another person, no VAT would be charged??
Alex – It is our understanding that the VAT would work in the same way for holiday homes as it does for cars etc.
In a private sale an individual wouldn’t “pay” VAT to the government on the sale, but VAT is included as it was paid by the original seller.
Say you buy a holiday home for £20,000 (including VAT) and sell it for £19,000 two years later to a private individual. You haven’t taken out the VAT. It’s still in there.
I hope this clears things up.
Neil
Leisuredays
Alex McGuire, on April 19th, 2012 at 4:58 pm Said: Your comment is awaiting moderation. Sorry Neil for any misunderstanding. Ok, I buy a new car and pay VAT and sell it privately 2 years later. When I sell it I will certainly not charge VAT on the sale.
Someone buys a new static caravan and pays 20% VAT from 1st October. I buy the caravan 4 years later from the original owner (either through a caravan park or privately) I wouldn’t expect to pay VAT. This would mean paying VAT twice, IF YOU GET MY DRIFT!! Therefore, I don’t understand why VAT is being paid twice on a second hand caravan?
How would VAT work if I buy a second hand caravan from a supplier? Is the ruling different as it is not a private sale?
“I’m was wondering why if statics were 0% vat that when you look at the pricing on the manufacturers sites like Pemberton there’s Vat added to the price.”
VAT is charged on items that can be removed, ie Fridge, Microwave etc
Alex, Jamie – It is our understanding that IF the new VAT rate comes into force then it would work in the same way as it does for any other vatable product, i.e. a car.
A VAT registered company, i.e. a car dealership or a static caravan park, would have to pay VAT when they sell a used product.
A private seller doesn’t need to worry about it!
Neil
Leisuredays
I am selling my caravan which is sited on a caravan park, when sold i pay the site office their normal fees for the sale. Do i have to pay the new VAT?
Sorry to bother you again Neil. I have been in touch with a VAT registered car dealership and they have informed me that it depends on where the car originates from, will depend on whether they charge VAT. For example, if it’s a Fleet Car then they would include the VAT in the price because the original owner of the fleet car would have claimed back the VAT. However, if the car, for example, is a trade in, the car dealership would NOT charge VAT on the re-sale price of the used vehicle. Therefore, this brings me to the mail point of my discussion – If I were to sell a used caravan to the site owner or a dealership as a trade-in for a new caravan then, I wouldn’t expect VAT to be charged on the second hand caravan.
is VAT APPLICABLE TO THE WHOLE UNIT OR JUST THE REMOVABLE ITEMS SUCH AS FRIDGES BOILERS ETC? CAN YOU ORDER IN SEPTEMBER FOR DELIVERY IN 2013 AND AVOID THE VAT
I am on an annual licence now for the next five years at my site in Caernarfon. With the 20%vat there is no chance of me even considering a pre owned later model. The site will not buy from residents now so it will be up to me to sell privately thus not charging vat to the buyer, but even then I will have to pay commision to the site owners and I do all the work. At a min umum of £2000 per year site fees, plus a proportion of the council tax, plus water and sewerage charges, electricity and Gas, not forgetting insurance and the cost of a 200 mile round trip for each visit, the time has come to seriously think about, staying at home in the garden for the summer and a couple of cruises instead.
We were thinking of upgrading at the end of the season but the increase may be prohibitive unless the govt rethink. Even a real good second-hand static may be out of the question as all values will have to rise. We will certainly be contacting our MP
You didn’t answer all of Peter Bennion’s query (March 24th), he was asking about a “Park Home” (usually residential) that is sited on a “leisure park” therefore NOT residential. You only confirmed that “residential” units will still be zero-rated. Please can you clarify his position?
Jane – The new VAT laws shouldn’t apply to you in this instance, but I would just check with your park and see what they have to say about it too to avoid any problems.
Fred – The proposal is for VAT to be applicable to the whole unit. With regards to your question about buying now and collecting later I think providing you bought the item and paid for it before the VAT rise then yes you would avoid it. Though I would certainly recommend you check with the company you are buying from.
Chris – Glad to hear you’ll be contacting your MP. Hopefully enough people who own a static caravan holiday home or work in the industry will do the same and we can stop this new tax rate coming into force.
Rosemarie / Peter – Park Homes constructed to BS 3632 (the building regulation/standard for Park Homes) destined for holiday use on holiday parks with an occupancy restriction WILL, as the proposal is drafted, be covered by the plan to charge VAT at the standard rate of 20 percent as HMRC propose to link the VAT rate to the actual use of the home. If a BS3632 unit is designated for permanent residential use and let as residential accommodation on park that does not have an occupancy restriction then the current zero-rate on the sale of the unit and exemption on the supply of the accommodation will continue to apply.
thanks for all your comments guys. It’s a complicated subject matter, and if the new tax does come in to force then there will invariably be applications and complications that haven’t been foreseen, or which we haven’t mentioned. We’re doing our best to stay abreast of the latest developments though and will pass on whatever info we have, and answer questions as best as we can.
Neil
Leisuredays
Does anyone please have the answer to my question above April 20th:
1. After 1st October I buy a NEW caravan – I would therefore expect to pay VAT at 20%
2. 5 years down the line I sell the caravan to the site owner
3. The site owner re-sells the same caravan to a prospective buyer.
4. How can the the site owner justify (on behalf of HMRC) charging VAT on the sale price of the now second hand caravan. This would mean an individual being charged VAT TWICE on the same item. How can this be?? I therefore do not understand why VAT is charged on a second hand (item) caravan even after VAT has been charged on the same new caravan.
I quite agree that the millionaires who make up the coalition cabinet do not give a twopenny toss about us ” ordinary” folks who have staycations in static caravans as opposed to luxury yachts in the caribbean nor about the firms in the UK who make them.No big tory donors there!Whilst VAT is levied in full on new cars,used cars are treated differently. Say you part ex your car with a dealer for £5000 and he sells it for £6500. Within that price the dealer pays VAT (ie you) on the profit in the car less any recon costs so iff he spends £500 he makes £1000 less vat of £166.66.the profit being £833.34 Simples.I guess thats how these government thieves will view statics.
I think John has it spot on. It’s our understanding that parks would just pay VAT on the profit.
Neil
Leisuredays
As per usual this government is kicking the people who work hard to have something nice in there lives, also if they are charging the vat on old and used vans that is once again taxing on already taxed goods, surely once paid that should be enough. The government will kill the mobile home making companys, cause yet more unemployment and hurt people who have just enough money to afford there british holiday homes. Back to holidays abroad I think! Hate this government more than any other and thats saying something!
My caravan is due for an upgrade but now because of the VAT it is out of the question. This will definitely be my last season after 20 years on a beautiful site in Cumbria. Over the years the price of new static caravans has risen and unfortunately I can no longer afford to replace mine. It makes me feel so sad. My family have enjoyed some wonderful holidays and we shall make the most of our last season there.
Why can’t they leave things alone. With site fees electric gas all going up,and we’ve heard that the goverment are also considering charging council tax on statics even if only used a couple of weeks a year, how are we going to afford to keep our vans, we won’t thats for sure.
Absolute disgrace I am due to upgrade due to my disability I require more room for adequate seating it means adding 2k per 10k spent! Very few vans suitable are less than 40k so now it will be 48k I think not! And from a government we didn’t vote in!!! Time 4 a change and hopefully we can save our statics from this tax!!!! Gutted to be honest families struggle old people struggle what pleasures are there 4 hard working people ???????? NONE!
I just heard about this robbing tax. I was preparing to purchase my first caravan on a holiday park in the end of season sales when i had saved more money.
Will this tax most probably be introduced or is there a reasonable chance of it being overturned?
Any saving that i make in a purchase at the end of the year would be more than swallowed up in VAT payments.
the VAT.
You sell your house and “hopefully” make a profit. Do you pay VAT on the profit – I think not??
can insurance companies as they are a business that is vat registered not reclaim the VAT when replacing a caravan on new for old basis therefore we would not need to add this figure to our insurance and as no money changes hands between us and the insurance company no VAT would be payable to the insurance company
I own a static caravan on a site in Wales how do the government propose to charge me vat on my van that is over 10 yrs old. Will it be on the size ( which is 3 beds) or on the current value, or on the plot. In the annual rent etc vat is already charged at 20% by the site owners.
Hi Folks, I have received a letter from the caravan site owners indicating that VAT will, from now on, be charged on local authority RATES. Can anyone throw any light on the situation?? Last time I got a bill for RATES there was no VAT charged. I have been in touch with the local authority concerned and was told that there would be no VAT charged on RATES. Where is this coming from???
I purchased a static caravan in July 2008 of which was advertised at £25,250.00. On checking my invoice I have paid part VAT.
Invoice states what caravan I have purchased £22,334.16 – zero VAT and straight underneath that £2481.57 – standard VAT £434.27, of which the VAT was 17.5% at the time. If VAT is not to be incurred until October how come I have paid part VAT on my purchase in 2008?
Once again this stupid Government of ours is proposing a policy where the implications of it’s introduction have not been properly considered.
Anyone with an ounce of common sense(some MPs excepted) will realise the serious knock-on effects that introducing this policy will have not only on reduced sales probably resulting in factory closures and yet more job losses but also on local shops and amenities losing trade from static owners in the vicinity of holiday parks. David Cameron and his buddies in this ‘one-session Government’ have no idea what it is to live in the ‘real world’ where most people have to think before spendind their hard-earned money. I for one will not buy another static if this punitve tax goes ahead!
Reply to Angie – I wonder if the purchase of the van was zero VAT but the service they provided to site it (& connect services) would have incurred VAT.
In reply to VAT on Rates – sounds like a rip off to me.
Remember VAT registration limit for 2012 is to go up to £77,000 turnover. So individuals, even if doing tax returns to HMRC for holiday lets should not have to worry about VAT returns. It will be site owners who sell new/secondhand vans who will be paying HMRC VAT on van sales ~ and we will be paying them of course.
John has a good point on VAT on second hand sales.. looked it up and its called “VAT margin schemes for second hand goods”. You learn something every day..:-)
Here’s an idea. Buy your BS3632 van to be sited on a residential site with no occupancy restrictions == NO VAT. Then move it to the site of your choice, it is a MOBILE home after all.
what we have here is a greedy tory government screwing the British public yet once again, you are taxed on your wages, then every thing you buy you pay VAT on we must be one of higest taxed countries in Europe. The people can hit back at the government for what they are doing by not voting for the torys or the lib dems at the next elections, use people power to put them out. Ordenary people are not allowed any luxuries, these are only for the rich. David Cameron and his government are not prepaired to listen to ordenary working class people. never forget your greedy tory government.
The VAT increase is not only bad news for the makers and those that buy static caravans, the company I work for supplies the mattresses, seating and curtains ect, for static caravans.
We are already on short time working, will this be the final nail in the coffin?. It will have a huge nock on effect because our suppliers will suffer too, and of course there will be more job losses too.
Re the vat question does anyone know anything about the council rates that we pay for our pitch, now having to be included in your pitch fee thus incurring 20% vat.
Is it not now the case that the goverment have cancelled the 20% V A T. on caravan park Amenities.
has the chancellor now reversed his decision to charge VAT. on caravan site amenities.
I have just received a rates bill from my caravan park owner and he has added 20% vat to bill The site is in Lancashire and only available for over night stay from 1st of March till 31st of October I understood that council rates did not warrant vat is this correct?
this lot in power just want to crush the working class and bring back the days were you had no time of work and no money to enjoy yourself ,like in the 1930
We have a static caravan on a site in Cornwall, we have just received a letter to advise we have to pay vat @ 20% for the supply of water. This applies to all static owners on the site. The water to each caravan is not on a meter we pay an annual fee to the park owner. Is this correct?
i am thinking of buying a static caravan on a site in wales, it is open 10 months of the year. It is a private sale but has to go through the park owners do i as well as the seller pay the 20 per cent vat the caravan was registered 2008 .
Hi Trish,
VAT is only applied on new unit sales so you don’t need to worry about it on this second hand unit.
Also the new rate is 5% (coming into force April this year) and not 20% as first proposed by the government. The park will take a commission on the sale though which will possibly appear as a percentage, but this has nothing to do with VAT.
Hope that helps,
Neil
Leisuredays
Re the vat on the rates I received similar information from my park site owner in portpatrick . Contacted the local authority who told me that I could pay the rates direct to them and would not incur vat . Took this to the park owner who said they did not allow this me thinks that this to cover up the fact that the rates are less than 200 pounds and not the six hundred we are being charged just the usual rip off by park owners .
What about disabled statics are they subject to vat or exempt as in other fields when buying new?
Cheryl
I have referred this to the National Caravan Council for their guidance. I’ll post their response on here.
Kind regards
Craig
Leisuredays
I have a2009 static caravan which we bought on a campsite in 2009.We are now selling back to the campsite,what persentage vat if any do i have to pay.
Hi Cliff
The HMRC website says “The private sale of goods which are not assets of your business is usually outside the scope of VAT and no VAT is due.” So assuming your static caravan is privately owned you wouldn’t have to pay VAT when selling it. If the campsite or park makes a profit when selling on the static caravan, VAT would be chargeable on the profit margin. Further information is available on the HRMC website
i am selling my park home in a few weeks time
the park manager says i got to pay 20 percent vat 7 days before i can sell thanks a lot chris
Hi Mr Gannon
We’re not qualified to advise on that. You could try contacting the National Park Homes Council – click here.
I am selling my static 2008 back to the park that i bought it from i know they will take 15o/o commision but will i have to pay VAT to them as well .That would mean i will be paying 35per cent out of the price they are paying me which is only a third of the cost i paid them five years ago .It was a used van then . Thank you if you can help .
Hi Shirley,
According to the NCC’s holiday caravan website (see here), rules for selling your home, including your rights, obligations and the VAT you’ll be expected to pay when selling your holiday caravan, should be outlined in your licence agreement.
If in doubt, click here to contact the NCC.
Many thanks
Leisuredays
Hi there could you clear something up for me Will I have to pay park owner Vat on a second hand static caravan which was paid first time as new?
It’s our understanding that suppliers of used static caravans will charge VAT. That is unless they are built to residential BS3632 standard. Guidance about the sale of used caravans is given here: https://www.gov.uk/guidance/vat-treatment-of-caravans-and-houseboats-notice-70120#section2
We’re not specialists in caravan sales so we would suggest speaking to your park owner and get their advice on how prices will be affected.