VAT, which is currently charged at the standard rate of 20%, hasn’t previously been levied on self storage rentals because self storage was treated in the same way as commercial property lending by the tax authorities. Under the previous tax arrangements, the lending of any kind of land, including rental property, was exempt from VAT. Self storage providers allocate their customers with a discrete area of land and so their supply can qualify for VAT exemption.
Providers of other types of storage
(such as traditional removal companies) which do not provide their customers
with a discrete area and are able to move their customers' goods around within
their premises, already have to charge VAT on their rental charges.
Around 30 per cent of self storage
is currently taxed because of the option to tax. Some self storage providers
have never opted to tax but those that do are able to reclaim VAT on the costs
of constructing or purchasing their storage facilities. Some self storage
providers have used avoidance arrangements to convert their taxable supplies
back to exempt supplies, gaining an unfair advantage over their competitors.
This measure was announced at Budget 2012 and a consultation document entitled VAT: Addressing Borderline Anomalies was published together with draft legislation. HMRC estimates that charging VAT on self storage will generate an additional £15 million for the treasury during the 2012-13 tax year, which they forecast will have risen to £30 million by 2013-14.
Barretts Self Storage has always charged VAT so we will not be increasing our prices by 20%
Barretts Self Storage provides the best prices in the region for Self Storage, so if you have been affected by a price rise, as a result of the introduction of VAT then please contact us for a quotation.
