The 5% rate on sanitary products will end. Rishi Sunak also plans to ensure banks keep circulating cash

The chancellor will announce the abolition of the “tampon tax” in next week’s budget, marking the successful conclusion to a 20-year campaign by women’s rights activists.

Tampons and other women’s sanitary products currently have 5% VAT added to their price, but this will be scrapped, saving the average woman £40 over her lifetime. The tax will be dropped when the transition period for Britain leaving the EU ends on 31 December.

In a separate move, Rishi Sunak is also expected to announce in the budget measures to protect access to cash. The chancellor is expected to introduce new laws that will ensure banks continue to circulate cash around the country and that it remains available to those who want to use it.

The independent Access to Cash Review last year warned that Britain’s cash system was on the verge of collapse. Natalie Ceeney, who chaired the report, said: “A guaranteed future for cash will be extremely welcome. We need the proposed legislation to be introduced quickly, so that we can maintain a viable cash system in the UK while so many people need it.”

UK cash economy close to collapse, campaigners tell chancellor Read more

The scrapping of the tampon tax is a victory for the two-decade long campaign by women’s groups against VAT rules that once categorised tampons as “non-essential, luxury items”.

Twenty years ago, Labour MP Dawn Primarolo successfully led a campaign to cut the VAT on tampons from 17.5% to 5%, but governments since then have said that EU rules have prohibited dropping the rate any further.

Sunak is expected to announce that the tax will finally be abolished when the transition period for leaving the EU ends in December 2020.

It is thought the tax cut will be worth 7p off a pack of 20 tampons and 5p off a pack of 12 pads.

Campaigners said they were jubilant. Laura Coryton started the Stop Taxing Periods campaign in May 2014 while a student at Goldsmiths, with her petition gaining more than 320,000 signatures.

She said: “The end of this tax symbolises the end of a symptom of sexism and the period taboo, which has created period poverty and has stopped girls from going to school. I’m so happy that all 320,000 people who signed my petition, as well as the many generations who have campaigned against this tax, have finally been listened to.”

The government has long insisted that the EU VAT Directive has prevented it from applying a rate of tax lower than 5%, although in 2016 the then prime minister David Cameron said he had persuaded European ministers to agree to change the rules to allow zero-rating of sanitary products, but that the implementation would take several years.

Paula Sherriff, who as a Labour MP campaigned against the tampon tax, said: “I am pleased that the tampon tax is finally being scrapped. Contrary to government claims, permission was granted to 0% rate menstrual products in 2016, following acceptance of my budget amendment. This was achieved through tireless campaigning by so many including the indefatigable Laura Coryton.”

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Elsewhere in the EU, there have been widespread campaigns to lower the tax, with Germany recently reducing its tampon tax to 7% from 19%.

In 2015, then chancellor George Osborne pledged that he would channel tax raised from VAT on tampons directly to charities that help women. Since then, £47m has been passed to the charities, although this will come to an end when the new zero rate of VAT on sanitary products is introduced.

The decision to pass the tax money to women’s charities was not without controversy. It emerged in 2017 that £250,000 of the money was handed to Life, a charity that campaigns against abortion.

• This article was amended on 9 March 2020 to clarify that the tax will be dropped on 31 December, which will be the end of the Brexit transition period, not when Britain leaves the EU as originally stated, because this happened at the end of January.