Retail businesses will usually calculate VAT automatically as part of a sales transaction. It is important to note the specific rules for VAT when charging for carrier bags under the Carrier Bag Levy.
If you only charge the levy, then the full 5 pence per bag should be paid to the Department of Agriculture, Environment and Rural Affairs (DAERA), as VAT is not applicable.
However, if you add your own charge on top of the levy, the full amount would be considered inclusive of VAT.
For example, if you charge 12 pence for each bag (7 pence on top of the 5 pence levy) then the total amount would be inclusive of VAT. The total VAT in this case would be 2 pence per bag - 0.83 pence of this would relate to the levy, with approximately 4.17 pence per bag payable to DAERA.
When you submit your quarterly return, the system will automatically calculate the amount to be paid to DAERA. VAT proceeds should be paid to HMRC in the normal way.
For more information on paying VAT to HMRC electronically, see submitting VAT returns, paying and repayments.
You can also contact the Carrier Bag Levy Team on Tel 028 7744 2056 or email email@example.com.