HMRC will be applying VAT to self -storage unit from October 2012, under measures that were announced in the budget this Spring. This could add 20% to user’s bills.
At present, the use of self-storage units is exempt from VAT because it is treated as a Licence to occupy land, similar to commercial property rents.
Therefore self-storage units have been treated in the same way as the rental of commercial property, and thus exempt from VAT. The government now wants to bring it in line with other forms of storage. If you are a VAT registered business using self-storage then you will simply offset the VAT charge in your quarterly returns.
But for domestic and non VAT registered users the effect could be an extra 20% on their outgoings.
There are also issues around the definition of self-storage, if self-storage is to be classified as something other than commercial property space. It is possible that this tax change could be part of a wider push to reduce property taxation and VAT anomalies. The British Property Federation are concerned that this definition could be expanded to industrial units with a subsequent application of VAT to all Licences and leases of commercial industrial property. The BPF are actively seeking clarification and assurances from HMRC that this will not be the case.
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