There is some good news in the latest budget proposals for around a third of all self storage companies in the UK that currently charge value-added tax (VAT) on storage. Budget changes will ensure that the unfair advantage gained by the majority of their competitors, who avoid charging VAT, will be removed.
From 1 October 2012, all self storage companies will be required to charge VAT on storage that they provide. Currently VAT-registered companies can avoid charging VAT on storage by allocating their customers a discrete area of land and so their provision can qualify for VAT exemption. A third of all storage companies either do not allocate a discrete area of land to a customer or choose the option to charge the tax on their storage rates.
This change is intended to level the playing field between self storage providers who have until now been able to qualify for VAT exemption under certain conditions and those that have not. It makes the VAT system fairer for all companies offering storage facilities.
Whilst this is good news for some storage companies, private individuals and some small businesses who currently use untaxed storage facilities will be affected by this budget change if they cannot reclaim VAT. It is likely that the rates of untaxed storage facilities will rise even if some storage companies absorb part of the 20% rise.
Guy Burridge, Director of Storing.com, one of the companies that already includes VAT in its storage rates, remarked, "With around 160,000 private individuals using self-storage in the UK this proposal in the latest budget could have a substantial impact on the cost of self storage for many people. At Storing.com we have always opted to include VAT in our charges so this change will not affect our rates. But there are around 250 VAT-registered self storage businesses in the UK that do not currently opt to tax their storage and they will be obliged to increase their rates from October to include some or all of the 20% VAT rate. Now would be a good time for individuals and small businesses to review their self storage arrangements before this change becomes law and storage rates at some facilities increase."
A consultation process on this legislation started on 21st March 2012 and will continue until 4 May 2012. The Self Storage Association (SSA) UK has begun consulting with its members and advisers to fully understand the implications of this proposal to charge VAT on the use of self storage and will engage fully in the Government consultation.
Storing.com was formed following research into the ideal service for self storage and storage space for rent based on the founders' twenty years' experience of running a sizeable storage and distribution company and working to the high demands of the supply chain. Based in the Home Counties their storage facility is easily accessible for London storage, with a daily collection and delivery service by their own satellite tracked trucks.