Explanatory note

This Order, which comes into force on 1st July 2006, amends Schedule 7A to the Value Added Tax Act 1994. Part 2 of that Schedule contains the Groups of supplies of goods and services that are subject to the reduced rate of VAT of 5% and Part 1 of that Schedule contains the Index to those Groups.

Article 3 of the Order adds new Groups 8 (contraceptive products) and 9 (welfare advice or information) to the Index in Part 1 of Schedule 7A.

Article 4 and the Schedule to the Order add new Groups 8 and 9 to Part 2 of Schedule 7A. The new Group 8 extends the reduced rate to qualifying supplies of contraceptive products. Supplies which fall within item 4 of Group 7 (health and welfare) of Schedule 9 (exemptions) to the Value Added Tax Act 1994 are not included. “Contraceptive products” do not include products which are designed for the purpose of monitoring fertility.

The new Group 9 extends the reduced rate to supplies of welfare advice or information provided by a charity or a state-regulated welfare institution or agency. Notes 1 and 2 to Group 9 define “welfare advice or information” and “state-regulated”. The supplies described in Note 3 are excluded from the reduced rate.

A full regulatory impact assessment of the effect that new Group 8 (contraceptive products) will have on the costs of business is available at www.hmrc.gov.uk. A regulatory impact assessment has not been prepared in respect of new Group 9 (welfare advice or information) as it will only have a negligible impact on business, charities or voluntary bodies.