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Face mask prices set to rise as VAT exemption on PPE ends

The temporary VAT exemption for personal protective equipment (PPE) comes to an end this weekend, meaning the cost of disposable face masks and other items is set to increase.

In May, the government introduced a temporary VAT zero rate on supplies of PPE, but the measure is due to end on October 31.

From the start of November, VAT on products such as disposable gloves, aprons, gowns, surgical masks, visors and goggles will revert to the standard rate of 20%.

This has proved controversial, given that face masks are now mandatory in shops and on public transport. Despite political pressure, the Treasury has so far refused to extend the exemption, but we will continue to monitor the situation.

Suppliers will now have to collect VAT on the sale of items such as face masks, which is likely to push up prices for consumers by 20% unless manufacturers and retailers absorb some or all of this cost.

However, businesses which are VAT registered will be able to reclaim the VAT on PPE, as they would for other business expenses.

Eligible health and social care providers, including care homes, pharmacies, dentists and optometrists, can currently order free PPE via a government portal.

The VAT exemption on PPE was originally due to end in August before it was extended. Over the past six months, the policy is estimated to have cost the Treasury £255 million.

This is not the only VAT change we have seen during the pandemic. In his summer economic update, the Chancellor announced a temporary cut in the rate of VAT to help the leisure and tourism sector.

This 5% rate on spending such as accommodation, admission to attractions, food and non-alcoholic drinks in cafes, pubs and restaurants was due to expire in January but has been extended until the end of March.

For more information about our team of VAT experts, click here.

FEATURING: Becky Hayes
Becky advises family business, companies and individuals on a broad range of VAT and SDLT matters. Becky’s particular specialisms include land and property, company reconstructions… read more
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