New VAT rules on storage units
Farmers and rural business owners in Bath and north east Somerset could be hit by changes to VAT rules. As of October 1 self storage units in rural locations will now be subject to the 20 per cent tax.
Chancellor George Osborne announced in his March Budget that previously exempt "discrete areas of land" would now be liable.
Kit Harding, a rural partner with Carter Jonas in Bath, said the change could affect farmers and rural businesses with empty yards who have rented out space or containers to individuals.
Under the new rules all businesses that are at or above the VAT threshold of £77,000 turnover in 12 months and supply storage as part or all of their activities must levy the tax on storage customers.
HMRC estimates that an extra £15 million tax will be raised in the current year, increasing to more than £35 million by 2015-16.
Businesses registered for VAT that rent storage may be able to reclaim the tax but it could mean a rise in costs for private individuals using the storage space.