The decision has been made to charge full VAT on PPE despite the current VAT exemptions for other essential zero rated items including motorcycle helmets, cycle helmets and protective boots.
The Government plans to end a VAT break on face masks and other medical grade personal protective equipment (PPE) on 31
st October 2020.
The main policy objective of the zero VAT rating of PPE that came into force on 1 May 2020 was 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 VAT exempt status, such as care homes, but will benefit all consumers.’
The treasury had previously reduced VAT on PPE to zero percent in May, because of the shortage of protective equipment in a bid to help combat the spread of COVID 19.
In August, the measurement was extended until the end of October, which reportedly cost the Treasury around £255 million.
The rise in VAT will mean that the cost of PPE will rise by a fifth.
The zero rate of PPE previously only applied to medical grade face masks and equipment, so any items that do not meet criteria outlined by Public Health England will not see any change in prices.
The changes will set a marked jump up on prices but it is worth knowing that most businesses can claim back any VAT costs that are incurred as expenses.