Covid-19: VAT cut on PPE extended

The Treasury has extended the temporary scrapping of VAT on personal protection equipment (PPE) until the end of October, with the move expected to save £155m for care homes and businesses dealing with the coronavirus outbreak.

The decision comes after a temporary zero-rate of VAT was applied to PPE sales for an initial three months from 1 May to 31 July.

Jesse Norman, financial secretary to the Treasury, said: ‘Extending the zero VAT rate on PPE will provide the relief needed by care homes in particular, so that as many people as possible continue to be protected against the coronavirus.’

Due to the extension, the zero-rate will apply for six months in total with consumers including care homes, home care providers and businesses estimated to save an additional £155m.

The government previously removed import duties from PPE and medical supplies intended to assist with the response to the coronavirus pandemic in April, to ensure more essential equipment can get to the front line quicker.

EU law governing VAT – which the UK is bound to until the end of the transitional period – requires the UK to charge VAT on the equipment.

But the government has acted under an exceptional basis allowed by EU rules during health emergencies. The European Commission recently indicated support for member states to introduce temporary VAT reliefs to mitigate the impacts of the Covid-19 pandemic.

The latest move will particularly benefit care providers, who are often unable to reclaim the 20% VAT they incur on their purchases.

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