Budget 2020

by Berthold Bauer on March 11, 2020

The 2020 Budget did have some announcements which will affect many of our NHS Clients.  Firstly, the NHS as a whole will be set to receive £6 billion of additional funding across the course of this parliament, and in addition, to support the recent outbreak of coronavirus, an emergency fund of £5 billion is being set-up.  The Chancellor gave assurances that the NHS would get whatever resource it needs at this crucial time – a welcome announcement.

Other announcements which are likely to impact the NHS positively were:

  • £10m of funding will be made available to support veterans with their mental health needs.
  • Changes to the pension tax rules will be implemented which will ensure that consultants earning less than £200k per annum can work additional hours without their annual allowance being reduced, thus reducing the likelihood of doctors refusing additional work on this basis
  • Immigration Health Surcharges will increase from £400 to £624 for adults, and from £300 to £470 for children, increasing the revenue the NHS will collect for treating immigrants.
  • The government want to create an additional 50 million GP appointments, and therefore plan to fund the Department for Health and Social Care & the NHS to train, recruit and retain 6,000 more doctors – a positive move towards more primary care resource.
  • As announced in Autumn 2019, £200m will be provided to the NHS to replace diagnostic equipment like MRI machines, CT scanners and Breast screening equipment. This expensive equipment is essential for diagnosing and treating patients early.
  • The government wants to protect capital investment in England and will increase the Department for Health and Social Care’s budget by £638m in 2020-21 to cover estate refurbishments and maintenance.

It was also previously announced that hospital car parking charges will be removed for those in greatest need, which will impact the NHS’s income from such activities. It is important to consider any VAT implications of this, particularly if an NHS organisation is conducting any building works to any pay & display car parks. Berthold Bauer can support you with any VAT recovery on schemes like this.

Other VAT related announcements from today’s budget include:

  • Zero-rating for sanitary products after many campaigned for ‘the tampon tax’ to be abolished.
  • Zero-rating for digital books and publications – previously VAT was chargeable on publications and books bought in electronic formats, creating a tax disadvantage when purchasing the same items electronically.
  • From 1st January 2021, postponed VAT accounting will apply to all imports of goods (whether they come from the EU or not). This may delay the payment of VAT for many items from non-EU countries for many importers, as previously you had to pay the VAT to release from the port.
  • The government recognise the complexities in the adjustments required around partial exemption calculations and the Capital goods scheme. They will continue to consult on these matters to see whether there are any appropriate measures which need to be taken.

If you have any questions relating to the 2020 budget announcements, please do not hesitate to contact a member of our VAT team.

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