Friday 6 March 2020 10:30 pm

Budget 2020: Chancellor Rishi Sunak to scrap 'tampon tax'

The so-called tampon tax is set to be abolished in next week’s Budget.

A zero rate of VAT will apply to women’s sanitary products from the start of next year.

The UK has been obliged to pay the EU VAT Directive since 1973 and the tampon tax is currently five per cent.

MPs voted against challenging the bloc on the tampon tax in 2015.

Read more: Pilots union calls on government to suspend air passenger duty in next week’s Budget

The move cannot come into effect until the end of the transition period as a result. That will come in December 2020, when the UK will cut ties with the EU.

It is a move that “honours a government commitment to scrap the unpopular tax”, the Treasury announced.

It will be one of the measures Chancellor Rishi Sunak unveils in his first Budget next week.

The move is set to save the average woman almost £40 over their lifetime on sanitary products

The tax cut will save 7p on a pack of 20 tampons and 5p on a pack of 12 pads, the Treasury said.

Read more: Brexit trade talks: Michel Barnier cites ‘serious differences’ between EU and UK stances

Commitment to cash in Budget 2020

The chancellor is also expected to outline a commitment to cash, with three in 10 payments still made using notes or coins.

Sunak is expected to commit to introducing legislation that protects those who rely on cash are able to access it and use it when needed.

Read more: Budget should include ‘hardship fund’ for firms hit by coronavirus, says British Chambers of Commerce chief

The Treasury said it will begin talks with the Bank of England, Financial Conduct Authority and Payment Systems Regulator to discuss how to move forward immediately after the Budget.

Other initiatives being explored include giving watchdogs more power to ensure banks support customer’s cash needs, as well as industry initiatives such as providing banking services via local Post Offices and initiatives for local communities to request a new free-to-use ATM