Treasury confirms it is to end VAT waiver on PPE in UK | HMRC

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Face masks and gloves will cost more from the end of this month after the government said a temporary waiver of VAT on personal protective equipment (PPE) would not be extended, the Guardian has learned.

The Treasury confirmed that the 20% sales tax would once more apply to protective equipment bought by firms and consumers from November, after a six-month exemption.

While care homes and the healthcare sector can access PPE from the Department of Health and Social Care, the increase could mean extra costs for businesses and ordinary people, who are legally bound to use masks in shops and on public transport.

The government initially cut the tax to zero on 1 May to “relieve the burden of VAT on the price of purchasing PPE used for protection from coronavirus by frontline workers”. The measure applied to PPE approved for use by Public Health England and was aimed in particular at care homes, to help them buy stocks of masks, gloves and gowns, amid a flood of infections in the sector and a global scramble for equipment.

The total saving to care homes and companies is thought to have been more than £300m over six months.

Health and social care providers are now able to source PPE via a government portal designed for the purpose. But private sector businesses in the food wholesale and retail sectors, as well as ordinary consumers, cannot.

Food and convenience store wholesalers warned that they and other businesses that are obliged to use PPE are now facing increased costs just when they are struggling most.

James Bielby, chief executive of the Federation of Wholesale Distributors, said: “There couldn’t be a worse time to inflict extra costs on the food supply chain. Wholesalers have been trading at a loss for months because of the restrictions on their hospitality customers. Some of them have lost 80% of their business and are struggling to maintain their contracts to schools, hospitals and care homes.

“To burden them with a 20% increase in the price of equipment that they rely on to carry out their operations is kicking them when they are down and it will only increase the existing risk to food distribution to vulnerable groups.

“The reasons for introducing a zero rate haven’t changed, and we face months of further Covid-19 measures. It’s disappointing that the zero rate isn’t being continued for as long as Covid restrictions on trade are in place.”

Dawood Pervez, managing director of convenience store supplier Bestway Wholesale, said: “An increase of 20% is a significant amount, and it is a surprising move if we all wish to keep safe and control the pandemic.

“There is little doubt that increases in price will slow demand and act as a barrier to buying PPE for some, at a time when many peoples’ income has been reduced due to the pandemic, and every penny in their shopping basket counts.”

The Treasury confirmed that VAT would apply to PPE from 1 November, but advised firms to reclaim it as a business expense. An official said the cut was only ever intended to maintain the supply to healthcare providers, not to reduce costs for businesses and consumers.

Hafta Ichi
Source: The Guardian
Keyword: Treasury confirms it is to end VAT waiver on PPE in UK | HMRC

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