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VAT on Children's Clothing and Footwear
Children's clothing and footwear can be zero-rated for VAT, meaning you charge no VAT on the sale, when specific conditions are met. This applies to items designed for and suitable only for young children, based on strict size limits and other criteria. Understanding these rules correctly is...
Children's clothing and footwear can be zero-rated for VAT, meaning you charge no VAT on the sale, when specific conditions are met. This applies to items designed for and suitable only for young children, based on strict size limits and other criteria. Understanding these rules correctly is essential if you sell children's clothing or footwear.
What is zero-rating?
Zero-rating means you charge 0% VAT on a sale, rather than the standard 20% rate. This makes children's clothing more affordable for parents, but the rules about what qualifies are precise. If you get it wrong, you could face penalties from HMRC.
The four conditions for zero-rating
You can only zero-rate children's clothing and footwear when all four of these conditions are met:
1. It must be an article of clothing or footwear
2. It must not be made of fur
3. It must be designed for young children
4. It must be suitable only for young children
If even one condition fails, you must charge the standard 20% VAT rate.
What counts as clothing or footwear?
Articles of clothing
This includes obvious items like shirts, trousers, dresses and coats, plus:
- Hats, caps, braces, belts, garters and scarves
- Safety clothing that still functions as clothing, such as cyclists' tabards or sailors' life jackets
- Bibs, including plastic bibs with a curved tray at the base
- Disposable and reusable nappies (and nappy liners), as long as they're sold specifically for babies and young children
- Babies' shawls designed and sold as such
- Hooded rain covers for pushchairs, provided they're suitable for the baby to wear as a rain cape when out of the pushchair
- Padded sleeping garments shaped at the neck and armholes or with sleeves or legs
- Towelling bathrobes designed with a hood or sleeves so the baby can be wrapped in them as a garment
What doesn't count as clothing:
- Clothing accessories sold separately: reflective armbands, buoyancy aids, hand muffs, ear muffs
- Fastenings sold separately: buckles, buttons, zips
- Badges, patches and sew-on or iron-on items
- Pram and pushchair covers not designed to serve as rain capes
- Disposable nappy material sold in continuous rolls
- 'Mother-and-baby' shawls for wrapping around both mother and child
- Sleeping bags without neck holes, arm holes, sleeves or legs
Articles of footwear
This includes:
- Boots, shoes, sandals and slippers (including specialist items like ballet shoes or studded football boots)
- Ice-skating or roller-skating boots, with or without blades or rollers attached
What doesn't count:
- Blades or rollers sold separately
- Platform roller skates that attach to normal shoes
- Shoelaces, insoles, heel protectors and stick-on soles sold separately
The fur rule
You must charge standard-rate VAT on any clothing or footwear made wholly or partly of fur skin (any skin with fur, hair or wool attached).
Exceptions that can be zero-rated (if they meet the other conditions):
- Articles made using artificial fur
- Clothing made of rabbit, sheep or lamb skin
- Articles made from certain untanned and undressed skins (bovine cattle including buffalo, equine animals, goats or kids except Yemen/Mongolian/Tibetan, swine including peccary, chamois, gazelles, deer or dogs)
- Fur and fur-lined headgear, belts, gloves and footwear
- Articles only trimmed with fur, unless the trim area exceeds one-fifth of the surface area or (for new garments) the manufacturer's cost of the trimming exceeds the cost of the material
- Fur-lined boots
Size limits: Is it designed for young children?
HMRC bases the "designed for young children" test on specific measurements. These are based on children up to the day before their 14th birthday, when body dimensions begin to merge with adult sizes.
How to measure garments
Measure on a flat surface with creases smoothed out, buttons fastened and any intended overlap in place. For chest measurements, measure 2.5 centimetres (1 inch) below the base of the armhole and multiply by 2. For waist measurements, measure from one side of the fastened waistband to the other and multiply by 2.
Maximum measurements for boys' clothing
- Shirts: 104cm chest (41.0 inches)
- Knitwear: 104cm chest (41.0 inches)
- Jackets, waistcoats: 109cm chest (43.0 inches)
- Top coats, outerwear: 114cm chest (44.5 inches)
- Trousers, shorts: 72cm waist (28.5 inches)
- Underwear, swimwear: 88cm chest (34.5 inches), 72cm waist (28.5 inches)
- Nightwear: 105cm chest (41.5 inches), 73cm waist (29.0 inches)
Maximum measurements for girls' clothing
- Shirts: 105cm chest (41.5 inches)
- Knitwear: 105cm chest (41.5 inches)
- Jackets, waistcoats: 110cm chest (43.5 inches)
- Top coats, outerwear: 115cm chest (45.0 inches)
- Dresses: 98cm chest (39.5 inches)
- Skirts: 71cm waist (28.0 inches)
Items at or within these measurements qualify as designed for young children.
Is it suitable only for young children?
Even if clothing meets the size limits, it must also be suitable only for young children. This means adults wouldn't realistically wear it. The design, styling and how it's marketed all matter. An item marketed to adults or designed to appeal to adults would fail this test, even if it's within the size limits.
This condition is sometimes called being "held out for sale" to young children specifically. If you market or display an item in ways that suggest it's for older children, teenagers or adults, it becomes standard-rated.
Footwear size limits
The source material focuses on clothing measurements and principles. For footwear, the same four conditions apply. Footwear must be designed for and suitable only for young children to qualify for zero-rating. Practical size limits exist, though specific measurements aren't detailed in the same way as clothing.
Practical implications for retailers
If you sell children's clothing or footwear, you need to:
- Check each item against all four conditions before zero-rating it
- Keep records showing why you believe items qualify
- Be particularly careful with items near the size limits
- Consider how you market and display items, as this affects whether they're "suitable only" for young children
Getting VAT treatment wrong can result in penalties and interest charges, so when in doubt, seek professional advice.
Sources
This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.
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