Self-storage prices threatened by VAT crackdown in the U.K.
Customers using self-storage firms could be hit with higher prices after the chancellor set out proposals to erradicate VAT (Value Added Tax) anomalies, in the self-storage industry, yesterday. In his third budget, Osborne said the government will crackdown on some of the loopholes in the VAT system. Currently the rental of self-storage units is exempt from VAT while other forms of storage are not. The official budget publication said: “From 1 October VAT will be extended to reduce anomalies, including the use of self-storage (to align it with other forms of storage) and alterations to listed buildings (to align with the existing VAT treatment of repairs.) Safestore Holdings (LON:SAFE), Britain’s largest self-storage company, said this morning it will change its VAT policies in line with new legislation. “This proposed legislative change would have an industry wide impact in the UK.” It intends to enter talks with HMRC about the proposed change. However it added the new legislation will have no impact on its Parisian business which accounts for around 25 per cent of its revenues while half its space in the UK is rented by businesses which can claim back VAT. Analysts at broker Espirito Santo said: “We expect a combination of price rises and margin dilution” for Safestore and competitor Big Yellow (LON:BYG). “We calculate the proportion of revenue at risk from the VAT increase at 54% for Big Yellow and 31% for Safestore.” Meanwhile smaller company Lok’nStore (LON:LOK) said it would be unaffected by the legislation. Aim-listed Lok’nStore said: “The company would like to clarify that unlike many players in the self-storage industry, Lok’nStore has always charged VAT on its storage services and therefore this proposed change will have no impact on the company or its customers.” Lok’nStore share price was flat at 107.5p, whilst the Safestore share price dropped 2 per cent to 116 pence and Big Yellow share price dipped 3.6 per cent to 299 pence. (via Proactiveinvestors.co.uk)]]>