Tax Plan 2023: the VAT and transfer tax measures
A zero rate for solar panels, 21% VAT on nitrous oxide cartridges and an increase in the general transfer tax rate to 10.4%. We set out the proposals.
The government published its tax plans on Budget Day. Below we set out the proposed VAT and transfer tax measures. All of them must first be approved by both chambers of parliament.
Zero rate for solar panels
From 1 January 2023 a zero rate applies to the supply of solar panels used as roofing, intended to be installed on or in the immediate vicinity of homes. It also covers their installation.
The measure is aimed above all at reducing the administrative burden on the tax authorities and on private owners of solar panels. With a zero rate there is no VAT for private individuals to reclaim, and because most of these small businesses stay below the VAT registration threshold on the electricity they feed back into the grid, registration can be avoided.
21% VAT on nitrous oxide cartridges
Last year the Court of Appeal in Arnhem-Leeuwarden held that the reduced rate of 9% applies to supplies of nitrous oxide cartridges. That departed from the State Secretary's policy position, so the legislation is being amended.
Although these cartridges can be used to make whipped cream, in practice they are also used recreationally as an intoxicant. Suppliers usually cannot tell what the buyer intends. Nitrous oxide cartridges are therefore expressly excluded, whatever their use, from the reduced rate for goods evidently intended for preparing food and drink and wholly or partly absorbed into it. Supplies, and also intra-Community acquisitions and imports, will therefore attract 21%.
Transfer tax
The general rate of 8% rises to 10.4% on 1 January 2023. It applies to acquisitions of all non-residential property, such as offices and business premises, and also to homes the acquirer does not occupy as their main residence. Property investors in particular will therefore pay more, on both residential and non-residential acquisitions.