Budget 2017: Chancellor to scrap police and fire service VAT

Chancellor Philip Hammond will use today's budget to announce that Police Scotland and the Scottish Fire and Rescue Service will no longer pay VAT, it has been reported.

Philip Hammond. Picture: Getty

Scotland’s police and fire services became eligible to pay VAT after they were centralised into a single national police and fire services amid controversy in 2013.

They pay roughly £35m per year, but what the Scottish Government has termed a ‘glaring disparity’ will end as Scotland’s forces come into line with emergency services across the UK.

The BBC reports that Mr Hammond will confirm in today’s budget that both emergency services will, in the future, be refunded the tax, though the Treasury is believed to be stopping short of offering a rebate on the tax paid since 2013.

Today’s move will be seen as a win for the Scottish Government, but also the Scottish Conservative Group at Westminster, who have been touting their collective bargaining ability since 13 MPs were elected from the party in June.

Angus MP Kirstene Hair said: “The decision to centralise the police and fire was the SNP government’s, and they were told about the financial impact of their actions.

“As a Scottish Conservative group we have been able to discuss the VAT issue with the Treasury and press the case to fix this.

“Our priority here has been to sort this out so we can support our emergency services for the future.”

SNP MSP Ben MacPherson said ahead of the decision: “If the Tories are prepared to right their wrong and allow our police and fire services to reclaim VAT in years ahead, how can they then justify keeping the money which has already been taken?”