Carrier Bag Levy VAT
Understand the rules on VAT when charging customers for carrier bags in Northern Ireland.
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 levy charge per bag should be paid to the Department of Agriculture, Environment and Rural Affairs (DAERA), as VAT is not applicable. The Carrier Bag Levy system will show these as ‘lower rate bags’.
However, if you add your own charge on top of the levy, the full amount would be considered inclusive of VAT. The Carrier Bag Levy system will show these as ‘upper rate bags’ and VAT will be deducted at declaration stage.
If you only charge the levy, then the full amount per bag should be paid to DAERA as VAT does not apply.
If you add your own charge for a bag on top of the levy, the full amount then becomes vatable. Therefore, if you charge anything in addition to the levy the payment to DAERA will be made with the VAT removed ie 20.8333p payable from 1 April 2022 and 4.1666p is payable in respect of any period prior to 1 April 2022.
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 VAT returns.
You can also contact the Carrier Bag Levy Team on Tel 028 7744 2056 or email carrierbaglevy@daera-ni.gov.uk.