Question
To ask the Secretary of State for Foreign, Commonwealth and Development Affairs, with reference to the Windsor Framework, published on 27 February 2023, CP 806, what EU VAT rules and requirements will apply to Northern Ireland under that agreement.
Answer
The Windsor Framework secures substantive, legally binding changes, ensuring that Northern Ireland will benefit from the same VAT and alcohol taxes as apply in the rest of the United Kingdom. It specifically amends the legal text of the treaty to provide these critical freedoms and to lock in flexibility for the future.
Under these arrangements, the Government will restore the integrity of the UK internal market and UK VAT and excise area:
● The Windsor Framework enables the Government to bring forward legislation to ensure that Northern Ireland will be able to apply zero rates of VAT to the installation of energy-saving materials such as heat pumps and solar panels - rectifying the disparity between Great Britain and Northern Ireland.
● It ensures that reforms to alcohol duties, due to take effect this summer, will apply right across the UK from the outset - meaning cheaper pints in pubs and a clearer set of duties overall.
● It removes the limit on the number of reduced and zero rates in Northern Ireland, ensuring parity across the United Kingdom.
● It delivers full flexibility on rates in the future, by establishing new categories that can be applied for VAT purposes where goods are connected to property or consumed in Northern Ireland.
● It protects Northern Ireland's second-hand car market into the future with a new scheme to take effect from 1 May 2023, ending two years of uncertainty for traders and consumers.
● It exempts Northern Ireland businesses from a range of bureaucratic EU rules: saving 2,000 Northern Ireland businesses from needing to register for VAT under a 2025 EU Directive; and avoiding a range of other new burdens on SMEs, and divergence with Great Britain.
● And it establishes a brand new mechanism, first proposed in the UK's 2021 Command Paper, enabling the UK and EU to look at future EU rule changes and make further legally binding changes to resolve any distortive impacts that new EU red tape could cause.