The temporary scrapping of VAT on PPE has been extended until the end of October, the government has announced.
The three-month extension, which comes after VAT on PPE was temporarily zero-rated at the beginning of May and import duty was removed, will save care homes and businesses an estimated £155m.
Financial Secretary to the Treasury Jesse Norman 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.”
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, which allows member states to introduce temporary VAT reliefs to mitigate the impacts of the COVID-19 pandemic.
The move will particularly benefit care providers, who are often unable to reclaim the 20% VAT they incur on their purchases.
Funding has been provided to DHSC during the crisis to support the centralised procurement and supply of PPE, including supply to the NHS and care providers.
Two billion PPE items have been delivered to NHS and social care staff since the start of the COVID-19 outbreak.