Voluntary Organisations: VAT Exemptions

Treasury written question – answered at on 4 March 2024.

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Photo of Ben Bradshaw Ben Bradshaw Labour, Exeter

To ask the Chancellor of the Exchequer, what assessment he has made with Cabinet colleagues of the potential merits of making not-for-profit organisations that provide welfare services VAT exempt.

Photo of Nigel Huddleston Nigel Huddleston The Financial Secretary to the Treasury

VAT has been designed as a broad-based tax on consumption, and the twenty per cent standard rate applies to most goods and services. Whilst there are exceptions to the standard rate, these have always been strictly limited by both legal and fiscal considerations.

Welfare services provided by local authorities and similar bodies and charities are exempt from VAT, meaning no VAT is charged to the final consumer.

Welfare services provided by state regulated private welfare organisations are also exempt from VAT. State regulated suppliers are those that are registered with the Care Quality Commission, and are eligible for the VAT exemption where they are providing services that are state regulated.

The regulation requirement ensures that VAT relief is limited to providers certified as offering safe and high-quality welfare services. This is a long-standing requirement, and there are no plans to make changes to these rules.

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