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Temporary VAT zero-rating of PPE

Covid 19 maco3The 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 UK 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 UK 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.

The zero-rating should be automatically applied by suppliers, however, if you have purchased or will purchase PPE during the period 1/5/2020 to 31/7/2020, you should check your invoices to ensure that the PPE has been zero-rated.

If a supplier erroneously charges VAT on the PPE you have purchased, you should get in touch with them to make them aware that the VAT should have been zero-rated. 

For those regularly purchasing large quantities of PPE on an ongoing basis e.g. care homes, charities, dental surgeries, it may be worthwhile considering the timing of your PPE purchases e.g. could it be beneficial for a purchase to be made pre 1/8/2020?

If you are unsure or require further guidance, get in touch with Iain Johnston, VAT Specialist, Martin Aitken >get in touch

Video: VAT rates explained: standard, reduced rate and zero-rate >watch now

Covid 19 maco6

We have summarised the various announcements that have been made by the UK and Scottish Governments to support businesses, employers, employees and the self-employed during this period of disruption.

Covid-19 support available to businesses, individuals and third sector organisations facing the impact of the pandemic and the lockdown restrictions >read more

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