HM Treasury extends tax cut to PPE costs

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The government has announced temporary scrapping of VAT on PPE has been extended until the end of October – helping care homes and businesses save £155 million amidst dealing with Covid-19.

The government has announced:

  • temporary scrapping of VAT on personal protective equipment (PPE) for infection extended until the end of October
  • the three-month extension will save care homes and businesses an estimated £155 million
  • this news comes after VAT on PPE was temporarily zero-rated at the beginning of May and import duty on PPE was removed

Due to the extension, the zero-rate will apply for six months altogether.

Ministers had previously removed import duties from PPE and medical supplies intended to assist with the response to Covid-19 pandemic in April 2020 to ensure more essential equipment can get to the front line quicker.

EU law governing VAT – which the UK is bound to until the end of the transitional period – requires the UK to charge VAT on the equipment.

However, the government has acted 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.

Financial Secretary to the Treasury Jesse Norman explained, “Extending the zero VAT rate on PPE will provide the relief needed by care homes in particular, so that as many people as possible continue to be protected against the coronavirus.”

Funding has been provided to DHSC to support the centralised procurement and supply of PPE, including supply to the NHS and care providers.

It has already acted to speed up PPE supply, harnessing the power of UK industry, scouring the world for new stocks, and creating a new distribution network to send PPE to frontline staff around the country.

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