Heritage Healthcare has issued a letter with its competitors calling for the Chancellor to make social care services zero-rated for VAT.
The open letter was co-written by the people in charge of home care franchises Home Instead, Heritage Healthcare, Right at Home UK, KarePlus, Bluebird Care and Radfield Home Care. It calls on Chancellor Rishi Sunak to make their services zero-rated for VAT, rather than exempt (as they currently are).
Currently, social care providers like Heritage Healthcare don’t charge VAT on their service, but their VAT status also means they cannot reclaim VAT on costly expenses. The letter explains:
“Social care services (referred to as ‘Welfare services and goods’) should become zero-rated for VAT, rather than exempt. [This would mean] that we would not charge VAT on our services to the most vulnerable in society but could reclaim VAT on our expenses such as PPE, utilities, rent, repairs and many other services.”
The letter has been issued following the Government’s announcement that all PPE supplies will have a temporary zero-rate. It continued:
“The Covid-19 pandemic is bringing an issue that has been facing care homes and the home care sector into sharp focus. That issue is the financial pressure the sector is operating under. A major contributor to this pressure is the punitive VAT regime we operate under.”
The home care franchise argued that mobility retailers, who are currently zero-rated for VAT, already benefit from the rating.
“Mobility aids suppliers are zero rate for VAT, which means they sell their products or services (such as a stairlift installation) without charging VAT on most products or a maximum of 5% on a minority of products, yet they can reclaim all VAT on any input expenses incurred.”
If the changes come into effect, it’s hoped that it will allow care providers like Heritage Healthcare to save money and offer even better service to their client base across the UK.
Sophie Cole, Point Franchise ©