UK to introduce a cosmetic surgery tax?
British Chancellor George Osborne has revealed plans to put VAT on cosmetic surgery procedures in an attempt to boost the UK’s coffers. It is estimated that the plans would bring in up to £500million a year in tax. The cosmetic surgery industry in the UK is worth around £2.3 billion a year – and this figure is said to be growing.
The move has already been nicknamed ‘the boob tax’ and would see cosmetic procedure prices increase by 20 percent on procedures such as breast enlargements, liposuction and tummy tucks. At present, only minor treatments – such as Botox and chemical face peels – carried out in High Street Salons have been subject to VAT.
The only exception to the tax would be if the patient was having a cosmetic procedure for therapeutic reasons where a doctor or psychologist has identified that the patient has a medical condition (e.g. body dysmorphic disorder) or disfigurement.
Some cosmetic surgeons are worried that there will be grey areas when it comes to who has to pay VAT and who doesn’t. Some have questioned how easy it will be to distinguish between which procedures should be taxed and which shouldn’t. For example, should a child with really prominent ears who possibly could be bullied have the tax applied to their procedure? How large to breasts need to become before they are deemed to be a truly physical problem that can allow a treatment without the tax? What level of asymmetry would be deemed as a ‘disfigurement’?
A similar cosmetic surgery tax – which was nicknamed ‘Bo-tax’ – was introduced in the US by President Obama in 2009. However it was subsequently dropped after claims that it discriminated against patients who hailed from poorer backgrounds.
HMRC have claimed that the new tax is a change of policy – instead, they are saying that they are only clarifying the current situation which was set out in a 2007 document. A statement from HMRC reads, “there have been no changes to, nor are there any plans to change, the VAT liability of cosmetic services.
“Medical care provided by registered health professionals in hospitals or clinics is, and will continue to be, VAT-free, along with cosmetic services carried out for therapeutic purposes.
“Medical treatment for purely aesthetic reasons has been, and continues to be, liable to VAT at the standard rate.”