New Carrier Bag Charges – Get the VAT right!

From the 1st October 2011 all businesses in Wales will have to charge at least 5p for every carrier bag they give out to customers.

 

Please click here for our help sheet highlighting the major points of the new legislation or here for the Welsh Government’s full guidance.

Whilst dealing with this new administrative burden it is important that you remember to get the VAT treatment right. Failure to do this could be a costly mistake!

The charge which has to be at least 5p is inclusive of VAT (where you are registered). This means you must account for VAT on all of your sales of single use carrier bags. So if you sold 10,000 carrier bags in a 3 month period at 5p per bag the total income would be £500. This should be accounted for as sales of £416.66 and VAT which must be paid over to HMRC of £83.33.

Many businesses are planning on giving the money generated to a local good cause or environmental charities. So make sure you take the VAT off first, or you will find yourself paying out twice when the VAT inspector next visits!

The best way to ensure that you get things correct from day one is to ensure that your tills or accounts systems are set up correctly.

Need any guidance on getting this done? Give me a call on 01792 410104 or email harri.lloyd.davies@bevanbuckland.co.uk 

 

 

 

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