COVID-19 costs for PPE prompt home care bosses to ask Chancellor for zero-rated VAT

Home care bosses have written to Chancellor Rishi Sunak asking that he change the ‘punitive’ VAT status of social care providers from ‘exempt’ from VAT to ‘zero-rated’ so that they can reclaim VAT on expenses for PPE and other costs.

Goods and services provided by social care operators are currently exempt from VAT, meaning that care providers do not charge VAT on their services but six home care bosses are appealing to the Treasury for a change to their VAT status because they cannot reclaim VAT on expenses in the long term.

Three-month exemption not enough say care bosses

From 1 May, PPE purchased by home care providers, care homes, businesses, charities and individuals to protect against COVID-19 was free from VAT for a three-month period. Up until then it was only the NHS that has been exempt from paying VAT. But home care leaders say the Treasury's move does not go far enough.

‘Currently one of the sector’s biggest and fastest growing expenses is PPE', the letter stated.

'And whilst we are grateful that VAT on PPE has been temporarily lifted for three months (announced 30th April) this is of short-term help but does not resolve the issue going forwards.'

In their letter to Rishi Sunak, home care owners at Home Instead Senior Care, Right At Home, Radfield Home Care, Bluebird Care, KarePlus and Heritage Healthcare say social care services should become zero-rated which would mean that ‘we would not charge VAT on our services to the most vulnerable in society but could reclaim VAT on our expenses such as PPE, utilities, rent, repairs, and many other services’.

Change in VAT status would keep care providers ‘in business’

The home care bosses say the cost to the Treasury of changing their VAT status from ‘exempt’ from VAT to zero-rated VAT would be ‘relatively small’ annually but would make a ‘significant’ contribution to keeping ‘financially under pressure social care providers in business’.

The letter was signed by Martin Jones, chief executive of Home Instead Senior Care, Ken Deary chief executive of Right At Home, Alex Green director of Radfield Home Care, Wayne Smith acting managing director at Bluebird Care, Yvonne Tomlinson chief executive at KarePlus and Michelle Fenwick director of Heritage Healthcare.

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