VAT zero rating for personal protective equipment

Last updated 5 May 2020

The Government have announced that there is a three month window of opportunity, beginning on 1 May 2020, to zero rate the supply of PPE equipment, as defined by Public Health England’s Coronavirus (COVID-19) PPE guidance issued on 24 April 2020. Although we have yet to see if there is any detail in the draft legislation and whether there are limits on the type of supply scenarios that may occur, the policy objective of this relief is clearly to relieve the burden of VAT on the price of purchasing PPE used for protection from Coronavirus by front line workers. This will particularly aid sectors that cannot recover VAT on such goods due to their non-business or VAT exempt status, such as care homes, but will benefit all consumers.

Usually the equipment is subject to VAT at 20%, although NHS Trusts and certain charitable bodies carrying out treatment may have qualified where PPE was ultimately bought from donated, charitable funds. Outlined below are the key impacts:

Impact on individuals

This measure is expected to have a positive impact on individuals who purchase types of PPE that fall within Public Health England’s guidance. This measure temporarily removes VAT from these products.

Impact on businesses

The measure means that care homes, and in fact all businesses needing PPE equipment during the next three months, can benefit from not having to pay VAT.  While some would be able to claim back the VAT charged, those really needing the equipment largely will have exempt income and therefore any VAT charged would have been a cost.

This is a welcome relief, one prompted by the EU, as usually the UK would not be able to add to the zero-rating schedule.

For more information please contact one of our VAT specialists here.