VAT: Dementia and Disability
The question
To ask the Chancellor of the Exchequer, what assessment her Department has made of the potential impact of VAT on the affordability of support services for people with (a) permanent disabilities and (b) dementia.
Answered by James Murray
Supplies of welfare services, including the provision of care for people with permanent disabilities and dementia, are exempt from VAT if they are supplied by eligible bodies, such as public bodies or charities.
When developing policy, including on VAT on welfare services, the Treasury carefully considers the impact of its decisions on those sharing any of the nine protected characteristics, including disability, age, sex and race, in line with its statutory obligations under the Public Sector Equality Duty set out in the Equality Act 2010.
More generally, VAT is a broad-based tax on consumption, and the 20 per cent standard rate applies to most goods and services. VAT is the UK’s second largest tax, forecast to raise £180 billion in 2025/26. Exceptions to the standard rate have always been limited and balanced against affordability considerations.
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