What products do VAT exemption for disability apply to and can I claim it as a care home?
Are you looking at purchasing an item and wondering if you are able to get it VAT exempt? Well, the answer is it depends on three main factors.
As a supplier of care homes and the elderly we often get asked about the subject of VAT exemption. There are very strict rules around the use of VAT exemption for disabled persons and charities set out by the government that we have to adhere to.
In this article I promise to explain (as simply as possible!) what makes you eligible for VAT exemption.
The three criteria that you must meet in order to claim zero rating are:
- You, as the customer, must be eligible to purchase at zero rate.
- The goods are for the personal or domestic use of, you, the customer
- The goods and services are eligible to be supplied at the zero rate
I'm sorry that that sounds so official, but I have done my best to use the same terminology as the government website. So, below we will dive into each of the three criteria to understand what they mean in more detail.
What makes you, the customer, eligible?
There are two groups that we, as a supplier, are allowed to provide VAT exemption to. These are:
- Chronically sick or disabled people
- Charities
Individuals do not need to register with the government or any other body in order to qualify, Charities must be registered as charities with the Charity Commission and have a charity number.
Disabled people are eligible for VAT exempt if they are chronically sick or disabled, it cannot just be a short term disability such as a broken leg. See extract below for the exact information from the government website.
A person is ‘chronically sick or disabled’ if they are a person with a:
- physical or mental impairment which has a long-term and substantial adverse effect on their ability to carry out everyday activities
- condition which the medical profession treats as a chronic sickness, such as diabetes
If a parent, spouse or guardian acts on behalf of a ‘chronically sick or disabled’ person, your supply is treated as being made to that ‘chronically sick or disabled’ person.
Source: www.gov.uk
Charities are eligible for VAT exemption on eligible products provided the goods and services they are purchasing are for a specific disabled person (or persons) for their personal or domestic use. The Charity must provide the supplier with an eligibility declaration or certificate to request what goods should be supplied VAT exempt. You can view example declarations available on the government website here.
You cannot zero rate all of the goods and services listed at paragraph 2.4 to all charities. So you should take extra care in checking that a charity is eligible for VAT relief before zero rating your supply.
Supplies of goods listed at paragraph 2.4 to charities will only qualify for VAT relief where the goods are made available by the charity to a disabled person for their personal or domestic use – see paragraph 3.4.
Source: www.gov.uk
What is personal or domestic use?
The definition from the government website states:
Source: www.gov.uk
So, this means that the product can only be VAT exempted if it is going to be for a specific person, or a set of specific people and in no circumstances applies to business or commercial use.
Personal or domestic use does not cover:
- Goods and services for business or commercial purposes.
- Items that are placed in a communal area for the general use of a whole group of people. An example would be a wheelchair in a community hall.
- Goods and services intended for a resident of a hospital or care home; or for anyone attending a hospital or care home for treatment.
- Goods and services for any other person or commercial establishment, with the exception of a charity, where the goods are for use by, or in connection with, care provided to an inpatient or resident of a health institution or to a patient whilst attending the premises of a health institution where the items are intended for use in the care or treatment provided in the relevant hospital, nursing home or health institution.
Which goods and services are eligible for zero rating?
In order for a product or service to be eligible for VAT exemption, it must have been designed solely for the use of a disabled person.
The definition from the government website states:
You can zero rate the supply to an eligible customer (as explained in paragraph 3.1) of any other equipment and appliances that have been designed solely for use by disabled people.
Source: www.gov.uk
So, this means that the goods and services that are supplied must be specifically designed for someone who is chronically sick or disabled. The easiest way to check this, is to consider what the designers' original intention would have been. Was it to produce equipment or an appliance designed exclusively to meet the needs of persons with disabilities? If yes, then it is likely eligible for zero rating.
So, lets take a look at some examples of products that are eligible for VAT exemption:
- Incontinence Pads
- Electric Nursing Beds (provided it is clearly for the use of people with disabilities such as including cot sides and being height adjustable)
- Nursing Mattresses (provided they are designed solely for a disabled person)
- Patient Lifting Hoists, Standaids & Slings
- Commodes
And some examples that are not eligible for VAT exemption:
- Spectacles
- Contact lenses
- Hearing aids
- Patient Wipes
- Overbed Tables (While these are predominantly used by disabled persons, they are not only useful to disabled persons, and are used by others)
So, are care homes eligible for VAT exemption?
Unless the care home is a charity, the unfortunate answer is no. It states very clearly on the government website that in no circumstances are we to zero rate goods that are supplied to a care home, even if they are for the use of a specific resident from within the care home, and to be paid for by that individual. The extract below makes this very clear.
The following are excluded from the term ‘domestic or personal use’, and not eligible for VAT relief:
- goods and services used for business purposes
- supplies of eligible goods made widely available for a whole group of people to use as they wish, for example, a stair lift installed in a charity building and made available for the general use or convenience of all those chronically sick or disabled persons who might need it, rather than for the personal use of specified individuals
- goods and services supplied to:
- an inpatient or resident of a hospital or nursing home
- any person attending the premises of a hospital or nursing home for care or treatment
- any other person or commercial establishment, with the exception of a charity, where the goods are for use by, or in connection with, care provided to an inpatient or resident of a health institution or to a patient whilst attending the premises of a health institution where the items are intended for use in the care or treatment provided in the relevant hospital, nursing home or health institution
Source: www.gov.uk
So, in summary if the product you wish to purchase is eligible for VAT exemption, is for personal and domestic use and, you, the customer are eligible for VAT exemption we are able to remove the VAT from your order before you pay.
We are currently unable to accept VAT exempt orders online as we need a written declaration that is signed by the customer, or a guardian of the customer. Please call us if you have seen a product that you are interested in and would like to purchase with zero rating.
A large amount of responsibility is placed on the supplier to ensure that VAT exemption rules are adhered to, so we do everything in our power to abide by the law. We thank you for helping us in our endeavour.
If you have any further questions please reach out to us on 01392 823233 and we will do our best to assist you. We trust that this article has been useful in helping you understand who can claim VAT exemption.
