No VAT is charged on the sale of children’s clothing and footwear designed for children who are less than 14 years of age. This means that school uniform for primary-school aged children is already free from VAT, provided it falls within the tabled measurements of children up to the eve of their 14^th birthday, as this is when body dimensions begin to merge with those of the general adult population. The UK is one of only two countries among the 37 OECD member countries to maintain a VAT relief for children’s clothing.

There is a wide range of academic research into how VAT changes affect prices, which supports the conclusion that pass-through is typically only partial. This includes, for example, an International Monetary Fund study which examined the pass through of VAT changes for 17 countries over 1999-2013 and ‘What Goes Up May Not Come Down:

Asymmetric Incidence of Value-Added Taxes’ by Benzarti et al. which shows that prices respond more to VAT increases than decreases.

To ensure that the current scope of the relief is carefully targeted at those it is intended to benefit and is not used to circumvent paying VAT on clothing for adults, this relief is limited to clothing designed and labelled for children under the age of 14. The limit is set in relation to when the clothing measurements begin to merge with the general adult population, who could wear clothing such as plain white shirts or black shoes, with uniforms in a great number of secondary schools now including such non-branded items.

VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. The UK’s generous regime for children’s clothing costs approximately £2 billion a year, and we are one of only two countries in the OECD – out of 37 total - that maintain this zero rate.

Expanding the existing relief would also not necessarily succeed in reducing the price of school uniforms. Evidence suggests that businesses only partially pass on any savings from lower VAT rates, instead absorbing the additional saving from tax to increase their profit margin.

Going further by zero-rating all branded school uniform would also carry significant risks that the relief would not remain tightly targeted at those whom it would be intended to benefit. This is because many schools have moved away from traditional styles and uniforms, opting instead for a range of clothing that could be acceptably worn by adults, such as plain white shirts or black shoes.

VAT is a broad-based tax on consumption and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax forecast to raise £171 billion in 2024/25. Taxation is a vital source of revenue that helps to fund vital public services including schools and hospitals.

Children’s clothing designed for young children, including branded school uniform, already benefits from VAT relief. To ensure that this relief is carefully targeted this relief is limited to clothing designed and labelled for children under the age of 14.

Increasing the scope of this VAT relief to all school uniform would come at a cost to the Exchequer, with no guarantee that any reliefs would be passed on to consumers. We therefore have no plans to make changes here.