Question to the HM Treasury:

To ask the Chancellor of the Exchequer, if he will make an assessment of the potential merits of having zero VAT on children's bicycles.

VAT is a broad-based tax on consumption and the twenty per cent standard rate applies to most goods and services. Whilst there are exceptions to the standard rate, these have always been limited by both legal and fiscal considerations.

Zero rating children’s bicycles for VAT purposes would impose additional pressure on the public finances to which VAT makes a significant contribution. VAT is the UK’s third largest tax and is forecast to raise £161 billion in 2023/24, helping to fund key spending priorities. Any reduction in tax paid is a reduction in the money available to support important public services, including the NHS, education and defence. It is also not guaranteed that a reduction in VAT would lead to reduced prices for consumers.

Given this, the government has no plans to remove VAT on children’s bicycles. Nevertheless, the government keeps all taxes under review.