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GLOSSARY

Reduced rate definition

Published by a LexisNexis Tax expert

What does Reduced rate mean?

A supply, acquisition or importation is charged to tax at the reduced rate (VATA 1994, s.29A(1)) if it falls within the descriptions for the time being contained in VATA 1994, Sch 7A.

The descriptions in VATA 1994, Sch 7A can be varied by Treasury Order.

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VAT—zero-rated and reduced rate supplies

FORTHCOMING CHANGES to VAT energy saving materials relief – At Spring Budget 2023, the government published a call for evidence on areas of potential reform to the VAT relief regime for the installation of certain energy saving materials. The areas for potential reform include the expansion of relief to additional technologies (including battery storage) which meet the energy efficiency and carbon emissions reduction policy objectives and the extension of relief to the installation of energy saving materials at buildings intended solely for use for charitable purposes. The call for evidence closes on 31 May 2023. For further information on the call for evidence, see News Analysis: Spring Budget 2023—Tax analysis — VAT and indirect taxes.Under the UK's VAT rules, taxable supplies may be charged at the standard rate, or a reduced rate, or may be zero-rated.This Practice Note describes the main categories of zero-rated and reduced rate supplies, and provides some further information on five of the more common types of zero-rated supplies:•food•books and printed materials•construction of buildings, and some...

Climate change levy

Climate change levy What is the climate change levy? The climate change levy (CCL) is a mandatory tax on UK business energy use, charged at the time of supply, known as taxable supplies. It is administered by HMRC but collected by energy suppliers via energy bills. Taxable supply A taxable supply is the supply of a taxable commodity, including self-supply, by an energy supplier to a business consumer that is not excluded or exempt from the CCL. What is a business consumer? Business consumers include consumers in: • industry • commerce • agriculture, and • public administration Definition of self-supply A self-supply occurs where a gas or electricity provider or a producer of other taxable commodities consumes its own supplies for its own business purposes (eg for heating and lighting administration buildings not directly connected with production), which it would otherwise supply to a third party. However, energy is not liable to the CCL where a power producer uses energy that is necessary for, and directly related to, the...

Discover our 12 Practice Notes on Reduced rate

Will (Scotland)—Legacy to charity (10% of baseline amount), legacy of house with cash option, residue to number of individuals or to survivors or survivor of them, dealing with tax on lifetime gifts, renunciation

Will (Scotland)—Legacy to charity (10% of baseline amount), legacy of house with cash option, residue to number of individuals or to survivors or survivor of them, dealing with tax on lifetime gifts, renunciation STOP PRESS: Abolition of non-dom regime and introduction of residence-based IHT regime. Finance Act 2025 (FA 2025) which received Royal Assent on 20 March 2025, implements legislation to abolish the remittance basis of taxation and replace it with a residence-based regime, commencing on 6 April 2025. FA 2025 also replaces domicile as the key factor in establishing liability to inheritance tax. Other changes include amendment of the rules determining excluded property status, the abolition of protected settlements status of offshore trusts, and changes to overseas workday relief. For information on these changes, see Practice Notes: The abolition of the remittance basis of taxation from 2025–26 and A new residence-based regime for IHT from 2025–26. See also: Finance Bill Tracking Service: Key dates (Finance Bill 2025) and Finance Act 2025. I, [insert full name], residing at [insert full...

Will clause (Scotland)—legacy to charity pursuant to IHTA 1984, Sch 1A

Will clause (Scotland)—legacy to charity pursuant to IHTA 1984, Sch 1A 1 Legacy to Charity I bequeath a legacy of ten per cent of the baseline amount of my estate as defined in Schedule 1A of the Inheritance Tax Act 1984

Dive into our 3 Precedents related to Reduced rate

Can an enterprise management incentives (EMI) option holder claim business asset disposal relief in relation to the sale of shares resulting from the exercise of an EMI option if a disqualifying event has previously occurred?

Can an enterprise management incentives (EMI) option holder claim business asset disposal relief in relation to the sale of shares resulting from the exercise of an EMI option if a disqualifying event has previously occurred? Business asset disposal relief (BADR) is a reduced rate of capital gains tax (CGT) that individuals or trustees, but not companies, can claim when they dispose of business assets. Certain conditions must be met before the relief will apply. In relation to disposals made after 6 April 2025, the effect of the relief is to reduce the rate of CGT on the disposal to 14% on a lifetime limit of gains of up to £1m. Previously, the rate of CGT that applied when BADR was available was 10%, but this was increased by the Finance Act 2025, which also legislated that the rate would be further increased to 18% for disposals made on or after 6 April 2026. For details of the qualifying conditions for BADR and the lifetime limit that applies to it, see...

How can someone who is considered a tax resident in both the UK and another country reduce the risk of being taxed twice on the same income?

How can someone who is considered a tax resident in both the UK and another country reduce the risk of being taxed twice on the same income? To reduce the risk of being taxed twice on the same income, an individual who is considered a tax resident in both the UK and another country can utilise the provisions of the applicable double taxation treaty (DTT). The UK has entered into numerous DTTs with other countries, which aim to eliminate or mitigate double taxation by either exempting income from tax in one of the countries or allowing foreign tax credits. However, where tax has been imposed by a country with which the UK does not have a DTT, or where the other country has levied a tax that is outside the scope of the DTT. It may be possible to claim unilateral relief under UK legislation. Under a DTT, relief from double taxation can be achieved in several ways. Full relief involves the source state giving up all its taxing rights...

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FTT determines VAT zero-rating did not apply to construction of mental health unit (NHS Ayrshire & Arran Health Board v HMRC)

Tax analysis: In NHS Ayrshire & Arran Health Board v HMRC, the First-tier Tax Tribunal (FTT) found that the construction of a secure mental health unit for children did not qualify for zero-rating as it was classified as part of a ‘hospital or similar institution’.

ACA calls for swift action on pension surplus plan

Law360: The UK must act swiftly in developing a new regime to allow businesses to tap into well-funded pension plans to invest in themselves or the wider economy, the Association of Consulting Actuaries (ACA) urged on 6 May 2025.

Read the latest 6 News articles on Reduced rate