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HM Revenue and Customs Brief 07/13


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Issued 02 April 2013

VAT: Introduction of a levy on 'single-use' carrier bags in Northern Ireland


On 8 April 2013 a levy of 5 pence will be introduced on single use carrier bags supplied in Northern Ireland.

This Brief explains the VAT treatment of the levy.

Legislative framework

The levy is being introduced under The Single Use Carrier Bags Charge Regulations (Northern Ireland) 2013 (which can be found at which require retailers to charge a minimum of 5 pence for each single use carrier bag provided to customers. Retailers may charge a higher amount if they wish.

  • Retailers are required to pay the 'net proceeds' of their charges to the Department of Environment Northern Ireland (DoENI). In cases where a retailer charges the minimum of 5 pence, the full amount must be paid to DoENI.
  • However, a retailer who charges more per bag must pay DoENI 5 pence less VAT (5p x 5/6 = 4.17p)

Certain bags are currently exempt from the levy, for example, 'bags for life'.

Detailed guidance on how the scheme operates is available from the DoENI website:

Guidance on the single use carrier bags charge regulations (Northern Ireland) 2013 (PDF 343K)

VAT implications

Where only the 5 pence levy is charged for a carrier bag and it is remitted in full to the DoENI, no VAT is due from the retailer in any circumstance.

However, where the charge exceeds 5 pence, then VAT is payable on the total amount where the bags are supplied by VAT registered businesses. For example, if a retailer charges 12 pence for a bag then VAT of 2 pence will be due from the retailer (12p x 1/6 = 2p).

If only the 5 pence levy is charged, then this amount should not be included in the DGT for any Retail Schemes. If taking the example above, 12 pence is charged, the bag should be treated as a standard rate good for Retail Schemes.

Direct Tax implications

For the purposes of Corporation Tax and Income Tax, all receipts in respect of single-use carrier bags should be brought into account in calculating trading profits. A deduction for the 'net proceeds' statutorily payable to DoENI is available. Figures should be adjusted for VAT when accounts are drawn up on a VAT-exclusive basis. For the avoidance of doubt, where only the minimum amount is charged, the VAT-exclusive price to be brought into account will be 5 pence per single bag as no VAT will be due.

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Crown Copyright 2013.

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Article Published/Sorted/Amended on Scopulus 2013-04-04 13:58:01 in Tax Articles

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