Care home organisations are requesting the Chancellor of the Exchequer changes legislation so businesses in the sector can reclaim VAT.
Simon Parker, founder of the Care Leaders Network, which has more than 250 members, is writing to Rishi Sunak asking for more support to help operators remain sustainable during the Covid-19 crisis.
For every pound they spend, care businesses are charged 20% VAT but are not able to claim it back unlike other businesses. This means for every pound spent their actual outlay is £1.20, Parker said.
To support providers, the government introduced a temporary VAT zero rate on personal protective equipment (PPE) in May. This comes to an end on Friday 31 July.
‘Care home businesses have seen a massive spike in costs because of having to pay for things like additional PPE and at the same time as dealing with significant decrease in income because they are unable to admit residents,’ Parker said. ‘My fear is that without this support from the government, this immense financial pressure will become untenable for many businesses.’
Fears over the future of the care operators have been raised over the past couple of months, including from council chiefs and operators.
Robert Kilgour, executive chairman of Renaissance Care, is supporting the campaign for a change in legislation. He said: ‘The Westminster government and Scottish government have given money to local authorities for distribution, but the sad fact is that much of it has not got to the frontline where it is needed.
‘The proposed changes in legislation would be of great benefit to all UK care homes directly as they recover from Covid-19. My contention is that when the money is spent by care homes that it would have a sizeable net positive impact in boosting our ailing economy.’
Owners of care homes wanting to support a change in legislation should email Parker at [email protected] before Monday 6 July with information about the number of homes they own, number of beds they have, and size of their workforce.