As part of the Spring Finance Bill 2023, the government has introduced legislation as to how VAT will be accounted for on deposits charged for drink deposit return schemes. Following the introduction, a consultation has been published: 'Draft regulations: VAT provisions for drink deposit return schemes', seeking views on the regulations.

In December 2022, the Scottish Government announced the introduction of a Drinks deposit scheme in August 2023. The UK Government supports the scheme and has set out new rules on the VAT element of the scheme in the Spring Finance Bill 2023. The regulations will set out how the VAT will be accounted for and by whom and when.

  • The deposit amount is excluded from the taxable sales value.
  • VAT is only accounted for on the deposit of the containers not returned.

The regulations intend to provide for:

  • The definitions to be used.
  • The method of accounting for the VAT on the deposits not returned.
  • Error correction.
  • Tax points for deposit scheme administration services.
  • Additional rules for businesses where it is not possible to distinguish between deposits where VAT has and has not been charged on the sale (for example where containers were sold in a tax warehouse).

A VAT notice will be published at a later date with further rules.

Views are sought on the working of the regulations plus any other consequences there may be. These can be submitted to This email address is being protected from spambots. You need JavaScript enabled to view it.. The consultation will be open until 17 May 2023.

Useful guides on this topic

Scottish Deposit Return Scheme
The Scottish Deposit Return Scheme (DRS), will be introduced from 16 August 2023. It is an environmentally ambitious scheme for single-use drinks containers and HMRC have confirmed the VAT treatment.

Time of supply (Tax Point)
The time of supply of goods or services determines the date on which VAT becomes due. There are a number of different rules which must be considered. 

Place of supply: Goods
The place of supply (POS) of goods determines whether the supply is within the scope of UK VAT and whether VAT is payable on that supply.

External link

Draft regulations: VAT provisions for drink deposit return schemes


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