Covid-19: £100m VAT cut on protection equipment

Personal protective equipment (PPE) purchased by care homes, businesses, charities and individuals to protect against Covid-19 is to be free from VAT for a three-month period.

The Treasury has announced a zero-rate of VAT will apply to sales of PPE for Covid-19 from 1 May 2020 until 31 July 2020, in a move it says will save care homes and businesses more than £100m.

The government said it has acted as soon as possible to bring the measure into force. EU law governing VAT, which the UK is bound to follow during the current transitional period, requires the UK to charge VAT on the equipment.

The government is acting 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 Treasury says the cut in VAT will particularly benefit care providers, who are often unable to reclaim the 20% VAT they incur on their purchases.