Spring Budget 2023: Key announcements for VAT and Indirect Taxes

Alex Nicholson

Alex Nicholson

VAT and Indirect Tax Partner

Alex Nicholson, Partner and Head of VAT & Indirect Taxes, gives an overview of the key announcements coming out of the Spring Budget 2023.


As expected, the major tangible Indirect Tax announcements related to Duties, with VAT developments confined to either small legislative tweaks or commitments to revisit certain areas of contention in the future.

The “Brexit Pubs Guarantee” represents a major shift in Alcohol Duty policy by effectively distinguishing between sectors. Across the UK, Duty on average-strength draught pints in pubs is to be frozen. This means that from 1 August 2023, Duty on draught products in pubs will be up to 11p lower than the Duty on similar drinks sold in the retail environment. This will no doubt be welcome news to the hospitality sector, which has often pointed to discrepancies in Indirect Tax treatment of the retail and hospitality environments, which it views as supplies of VAT-free groceries in shops (compared to hospitality catering which is subject to VAT at 20%) facilitating low-cost alcohol sales that arguably reduce pub footfall.

Additionally, Fuel Duty has been frozen for a further twelve months as the 5p cut announced in March 2022 remains.


From a VAT perspective, developments were minimal and related mainly to the healthcare sector, but it was confirmed that:

  • From 1 May 2023 the VAT exemption relating to the provision of healthcare services will be extended to include medical services carried out by staff directly supervised by registered pharmacists, going some way to address a seemingly arbitrary difference in the VAT liability of supplies overseen by different healthcare professionals; and
  • The zero rate for supplies on prescription will be extended to medicines supplied through Patient Group Directions.

Future commitments

Beyond this, further Indirect Tax developments were confined to commitments to future change and consultation. Of interest to many businesses in the Food & Drink sector will be HMRC’s confirmation that VAT will only be due on deposits charged under the Deposit Return Scheme in the hands of the producers where containers are not returned – a view which, in our opinion, does not go far enough to rectifying the amendments to HMRC’s initial position on VAT, which said VAT was chargeable on all deposits, irrespective (and in respect of which we made technical representations to HM Treasury).

Finally, developments are expected later this year on Customs Duty simplifications; import and export documentation filing extensions; and announcements on potential changes to the VAT legislation governing the provision of financial services.

Get in touch

Read the rest of our Spring Budget analysis on our Budget Hub, and for more information or to discuss any of the announcements, please don't hesitate to get in touch with me or your usual Johnston Carmichael contact.

Want to know more?

Just fill in our short form and one of our experts will get back to you shortly.