Reduced tax on caravans ‘will still hit firms’

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The Government’s reduced-rate caravan tax is still likely to harm manufacturing in East Yorkshire despite last month’s coalition U-turn, a new report states.

Documents published by the Treasury warn the new five per cent tax rate levied on the sale of static holiday caravans “could lead to a fall in demand”, meaning the measure “will impact local manufacturing in Yorkshire and the Humber, where the bulk of caravans are manufactured”.

MPs from across East Yorkshire fought a high profile battle against the Treasury’s plans to start charging VAT on the sale of caravans, forcing Ministers to scale back the new rate to five per cent.

The study published yesterday shows the revised Caravan Tax will net the exchequer just £5m next year – rising to £15m annually by 2016.