HM Revenue & Customs

General Election: VAT Perspectives – Liberal Democrats

by Berthold Bauer on July 2, 2024

On 22nd May 2024, Prime Minister Rishi Sunak announced a general election to be held 4th July 2024, prompting speculation about tax measures each party might adopt.

This article seeks to pull out the VAT policies as contained in key party manifestos, and touches on the on rationale, impacts and uncertainties these bring. For avoidance of doubt, this article does not seek to comment on resources beyond the manifestos, e.g. interviews, debates, statements from candidates in isolation, etc.

Liberal Democrats

The Lib Dems have three policies decreasing VAT revenues in favour of societal benefits, and one policy increasing VAT revenue in the name of reducing climate impacts.

Scrapping VAT on children’s toothbrushes and toothpaste

  • As part of ‘taking action to prevent tooth decay’, the Lib Dems are hoping more affordable dental care will lead to beneficial health outcomes.
  • The overall impact on VAT revenue is likely to be minimal due relatively low cost of these goods.

Review further education funding, including the option of exempting colleges from VAT

  • There is no surrounding context to this bullet point in the manifesto, other than being included in a broader list of other investments into education.
  • The Lib Dems appears to be expecting that the benefits of reduced operational costs, will be routed into improving educational resources and in turn a longer-term creating of a more educated workforce contributing positively to the economy.
  • Many colleges are either part of corporate groups of educational bodies, or have diversified their income streams over the past decade. Exempting colleges entirely from VAT will need careful implementing in practice, as many of these arrangements may need to be unwound or transferred to third parties in order to make the most of the VAT exemption.

Cutting VAT on public charging to 5%

  • The manifesto includes this under the aim to ‘make it easy and cheap to charge electric vehicles’.
  • Whilst the environmental and consumer impacts are attractive, the rate reduction makes no distinction between commercial businesses using public charging stations versus private individuals, suggesting all will be able to take advantage of the reduced VAT rate.

All of these reductions in VAT still leave the suppliers to determine whether they will pass these savings on to the consumer or instead use this to support their business operations temporarily. The Lib Dems have not suggested further whether taking advantage of these reductions would be mandatorily linked to other aims of the policy, e.g. if a college is exempt from VAT then X% of the savings achieved must be reinvested into certain types of education, but there is scope to do so if the will is there.

Introducing a new super tax on private jet flights, and removing the VAT exemptions for private, first-class and business-class flights

  • As part of the wider green agenda, the Lib Dems aim to ‘reduce the climate impact of flying’ through this policy and others. This may be achieved if the demand for flights is reduced given the increase in costs, and in turn lower carbon emissions generated from the aviation sector.
  • However, it is not clear whether the additional revenue would be used to support the aviation industry refocus its efforts in the green or perhaps support other environmental incentives. There are other points around reorienting airline to use alternative fuels however, this is linked to journey times rather than this VAT exemption.


See other party VAT perspectives:
Conservative Party
Labour Party
Green Party
Reform UK


We have been in conversation with many organisations on the potential impacts these policies may have on them and their viability. If this is something you would like to discuss further, then please contact us via our free VAT helpline and a consultant will reach out to you to discuss.

Berthold BauerGeneral Election: VAT Perspectives – Liberal Democrats

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