ACS (Advanced Clothing Solutions) and Fashion Roundtable have teamed up to champion VAT removal on sustainable fashion with the aim of supporting businesses to develop their sustainable practices.

As one of the UK’s leading circular fashion fulfilment facilities, ACS is redesigning the future of fashion and providing a solution to the industry’s sustainability crisis. In addition to helping retailers maximise their rental and resale potential, ACS is committed to finding strategies that will enable both fashion brands and consumers to make choices that are better for the planet and its communities. 

In support of this goal, ACS has compiled a report in collaboration with the Fashion Roundtable, entitled, ‘A preliminary analysis of the opportunities for reducing VAT on sustainable fashion brands and associated services’. 

This in-depth report highlights how removing VAT could serve as a crucial incentive for fashion brands to make meaningful changes that mitigate both the environmental and social impact of the industry.

“Sustainable fashion brands often have a higher entry cost due to their higher CAPEX and operating costs,” says Chief Operating Officer at ACS, Anthony Burns. “Although consumer habits are changing, with many people now considering factors such as how materials are sourced and how long items will last, price remains a significant barrier when it comes to choosing sustainable fashion brands over “fast fashion”.

“For this reason, we believe that removing or reducing VAT on sustainable fashion could be the catalyst for change that the industry desperately needs. By offering sustainable brands the opportunity to be commercially competitive, it may be possible to accelerate the consumer’s move towards more ethical products and therefore improve processes and reduce the waste associated with the sector.”

In addition to offering consumers a financial incentive, the removal of VAT could help to tackle the issue of greenwashing within the fashion industry. Evidence suggests that confusion surrounding the legitimacy of sustainability claims may deter consumers from investing in higher price points. However, implementing VAT exemption for those brands that meet specific sustainability criteria, could offer shoppers clarity in this area, and encourage more ethical choices.

Tamara Cincik of Fashion Roundtable said, “The report we created for the Treasury meeting coordinated by ACS built on our ground-breaking Cleaning Up Fashion report” where we called for tax incentives to support inward investment. The UK film industry is booming thanks to these initiatives, and we believe that sustainability and fashion could do the same with the right support from the government. ACS is a sustainable leader in innovation in the UK and we hope the government uses our report to give this kind of incentive for UK based companies in the near future.”

Although pioneering within the UK fashion industry, proposals of this kind have had success in other areas. For example, during the Covid-19 crisis, the UK government reduced VAT from 20% to 12.5% on hospitality and tourism. Research estimates the results of this reduction include 182,400 jobs created over the next five years, an additional turnover of £4.9 billion over five years and £4.6 billion net present value of fiscal gains for HM Treasury over 10 years.

“Put simply, the fashion industry has to get serious about the environment,” says Anthony Burns. “Going VAT-free could help to level the playing field for sustainable fashion businesses and provide the sector with the support it needs to pave the way for a greener, more ethical future.”