Autumn Statement 2023: VAT relief on sanitary products now extended to period underwear

In the 2023 Autumn Statement, it was announced that the government will extend the zero-rate on sanitary products to include reusable period underwear from 1 January 2024.

In 2021, the ‘Tampon Tax’ was revoked, making most sanitary products zero-rated for VAT. However, this development failed to include period underwear within the zero-rate, instead treating the product as an item of clothing, subject to VAT at the standard (20%) rate.

We can expect that this was due to an argument of primary use. Perhaps, it had not been appreciated that although period underwear may look like standard underwear, they are designed to replace the need for, and provide the same use as, other zero-rated sanitary products.

As part of their ‘Say Pants to the Tax’ campaign, Marks & Spencer estimate that the VAT received from the supply of period underwear provides only 0.0017% of the total VAT receipts received by HMRC. They explain that, if HMRC were a UK household with an average income of £32,300 (after tax), the income earned would equate to just 55p each year.

The Chancellor’s move to extend the zero-rating of sanitary products to include period underwear can be seen as a ‘win-win’ situation, making a reusable and more sustainable option more affordable for the average consumer.