On 5 October 2015 a compulsory charge was introduced for single-use carrier bags. This charge is only compulsory to businesses with 250 or more full time equivalent employees however smaller businesses can introduce this charge voluntarily. Whilst larger businesses will have to keep records of carrier bag use, smaller businesses do not have to.
The Government has advised that the minimum charge should be 5p per bag but also that this charge is trading income and is therefore subject to corporation tax or income tax (dependent on the status of the business). This charge is also inclusive of VAT so all VAT registered businesses must declare this sale on their VAT return.
There are some specific purchases where a bag would not be charged for. For example – uncooked fish and meat, loose seeds, flowers.
Business customers purchasing a bag will be able to claim the VAT back on their purchase if they are VAT registered and if they are provided with a VAT receipt for their goods and the bag.
The Government expects the proceeds from the sale of bags to fund good causes in England.
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