20 October 2014    |    Taxation

VAT on single-use carrier bags

5p carrier bags levy

As of today, a 5p charge is levieed by the retailer on every single-use carrier bag sold in Scotland.  Similar schemes have already been introduced in Northern Ireland and Wales.

Levy on carrier bagsThe legislation is provided by HMRC at Business Brief 38 (2014), but this can be boiled down to four basic facts you need to know:

  • where suppliers are liable to charge VAT, the amount they charge for a bag is tax inclusive at the standard rate of VAT. For a VAT registered business charging 5 pence, the taxable amount will be 4.17 pence and the VAT 83 pence
  • suppliers using a Retail Scheme should ensure that VAT is properly accounted through their scheme
  • non-VAT registered suppliers must still charge the same minimum amount of 5 pence
  • for Corporation Tax and Income Tax, receipts from the compulsory charge on single use carrier bags should be brought into account in calculating trading profits

Put simply, the 5p is incldued as part of your standard rated sales, and the ex-vat amount is extra taxable income/profit.


The information provided is for general information purposes only.

Legislation and details may have changed since this was written.  The text may not include all matters that are relevant to your individual situation.

You should not make decisions, or refrain from making decisions, without taking further professional advice about your specific circumstances.

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