The tampon tax is expected to be abolished in the Budget, with the Chancellor committing to slash the VAT on women’s sanitary products to zero.
Rishi Sunak is planning to announce on Wednesday that the widely-unpopular tax will end with the Brexit transition period at the close of the year.
EU law has so far prevented member states from reducing the rate below 5%, which means tampons and pads are treated as luxury items and not essentials.
But the Government plans to introduce the zero rate on January 1, the first day the laws no longer apply to the UK.
The Treasury estimates the move will save the average woman nearly £40 over her lifetime, with a cut of 7p on a pack of 20 tampons and 5p on 12 pads.
While the EU has been working to give member states the ability to scrap the tax, successive UK governments have committed to abolish it.
Critics have long criticised the tax for contributing to “period poverty”, where sanitary products are pushed out of reach because of their cost.
The UK currently uses the revenues raised to fund charities which aid vulnerable women, with £62 million having been allocated since the scheme was launched in 2015.
Campaigners welcomed the move but raised concerns the Treasury is not planning to replace the Tampon Tax Fund with other investment.
The chief executive of the Women’s Resource Centre charity, Vivienne Hayes, said: “We are over the moon to learn of this news, tampons and sanitary towels were never luxury items and should never have been subject to VAT.
“Congratulations to all the women who campaigned so long for this ridiculous and unfair tax to be removed.
“We are concerned that the Tampon Tax Fund will now be abandoned by the Government and we hope to see a replacement fund for women’s health and support charities announced in the near future.”
They also urged Boris Johnson to go further and spend the £700 million they estimate has been raised during the tax’s lifetime to be paid back to women’s charities, with Ms Hayes saying: “Come on Prime Minister pay back the tampon tax.”
Mr Sunak was already facing some budgetary criticism over the delay to the long-awaited National Infrastructure Strategy.
The £100 billion investment tackling the climate crisis and boosting transport connectivity had been set to be published “alongside” the Budget.
But Whitehall sources were acknowledging it would now be delayed by a number of days or weeks.
Labour’s shadow chancellor John McDonnell said the hold up represented “absolute chaos” in Government.
“We are facing the threat of climate change and an economy at risk of recession. That’s why we desperately need an immediate start to large-scale infrastructure investment,” he said.
“Delaying implementation of investment is unacceptable.”
And National Infrastructure Commission chairman Sir John Armitt said they were “disappointed” at the delay, but expressed confidence that ministers remained committed to infrastructure investment.