Combined County Authorities VAT refunds under section 33 of the VAT Act 1994
Published 26 November 2025
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This publication is available at https://www.gov.uk/government/publications/vat-refunds-of-vat-for-combined-county-authorities/combined-county-authorities-vat-refunds-under-section-33-of-the-vat-act-1994
Who is likely to be affected
Combined County Authorities established under the Levelling Up and Regeneration Act 2023.
General description of the measure
This measure will entitle Combined County Authorities to claim refunds of VAT incurred on purchases made to support their non-business activities, under section 33 of the Value Added Tax Act 1994.
Policy objective
The refund scheme provided by section 33 ensures that what would otherwise be irrecoverable VAT incurred on purchases of goods and services made to support the statutory non-business activities of local government bodies does not become a cost borne out of local taxation.
Background to the measure
Since VAT was introduced in 1973, local government bodies have been able to claim refunds of VAT under the section 33 refund scheme. In the absence of the refund scheme, this VAT would not be recoverable, as local government bodies do not usually make taxable supplies.
Section 9 of the Levelling Up and Regeneration Act 2023 enables the Secretary of State to establish Combined County Authorities, allowing a group of local authorities to pool appropriate responsibility and receive certain delegated functions from local or central government to deliver policy more effectively over a wider area.
Presently, the definition of Local Authority in section 33 does not include a ‘Combined County Authority’, with the result that it has been necessary to include new bodies by enacting individual Treasury Orders once they have been established.
This measure adds Combined County Authorities to the list of bodies eligible for refunds under section 33, removing the need for such individual Treasury Orders.
Detailed proposal
Operative date
The measure will have effect from the date of Royal Assent to Finance Bill 2025-26 and will have effect in relation to purchases and imports taking place on and after 1 December 2025.
Current law
Section 33(1) provides for refunds of VAT to eligible bodies on purchases and imports made in support of their non-business activities.
This refund only applies to bodies or groups of bodies listed in section 33(3) or bodies that have been individually specified by Treasury Order made under section 33(3)(k).
Currently, the list in section 33(3) does not include Combined County Authorities. Although section 33(3)(a) includes a local authority as an eligible body, the definition of local authority in the Value Added Tax Act does not include Combined County Authorities.
Proposed revisions
Legislation will be introduced in Finance Bill 2025-26 to amend section 33(3) to include Combined County Authorities. This measure will remove the need to individually specify newly established Combined County Authorities by Treasury Order.
Summary of impacts
Exchequer impact (£ million)
| 2025 to 2026 | 2026 to 2027 | 2027 to 2028 | 2028 to 2029 | 2029 to 2030 | 2030 to 2031 |
|---|---|---|---|---|---|
| Nil | Nil | Nil | Nil | Nil | Nil |
This measure is not expected to have an Exchequer impact.
Economic impact
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
This measure has no impact on individuals, households or families as it only affects Combined County Authorities.
This measure will have no impact on family formation stability or breakdown.
Equalities impacts
This measure only affects Combined County Authorities, therefore it is not anticipated that there will be disproportionate impacts on those in groups sharing protected characteristics.
Administrative impact on business including civil society organisations
This measure will ensure that current and future Combined County Authorities can continue to recover VAT and removes the need for individual Statutory Instruments each time one is established.
This measure is not expected to have any impact on Combined County Authorities’ administrative burdens, as the measure ensures that the Combined County Authorities are able to recover VAT to the same extent that their constituent local authorities would have claimed as separate entities.
This measure is expected overall to have no impact on their experience of dealing with HMRC.
This measure is not expected to impact civil society organisations.
Operational impact (£ million) (HMRC or other)
The additional costs and savings for HMRC in implementing this measure are anticipated to be negligible.
Other impacts
No other impacts have been identified.
Monitoring and evaluation
The measure will be kept under review through communication with affected bodies.
Further advice
If you have any questions about this change, contact David Smith by telephone on 03000 593922 or email david.smith7@hmrc.gov.uk.