The Treasury has extended the temporary scrapping of VAT on personal protective equipment (PPE) until the end of October.
The decision comes after a temporary zero-rate of VAT was applied to PPE sales for an initial three months from 1 May to 31 July.
The government previously removed import duties from PPE and medical supplies intended to assist the NHS with the response to the coronavirus (COVID-19) pandemic.
EU law governing VAT – which the UK is bound to until the end of the Brexit 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 impact of the COVID-19 pandemic.
The latest move will particularly benefit care providers, who are often unable to reclaim the 20% VAT they incur on their purchases. According to the government, the extension of the zero-rate will save care homes and related businesses an additional £155 million.
Commenting on the VAT cut, Jesse Norman, Financial Secretary to the Treasury, said: '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.'