Government Urged to Abolish ‘Unfair Dementia Tax’
An open letter calling for VAT to be removed dementia care was handed in to 10 Downing Street on by campaigners.
The Filo Project, an Exeter-based social enterprise group, offers dementia care to families.
Despite being a not-for-profit organisation, VAT rules require the group to charge families an extra 20% on the care it provides.
Staff said families supported by them had paid more than £700,000 just in VAT for care since the group was set up in 2014.
For individual families, the organisation believes this means a cost burden of almost £2,000 a year which could stop them from being able to access the care they need.
“The Government waives VAT for solar panels and caviar, yet essential dementia care provided by a social enterprise like us is considered a taxable luxury service,” Libby Price, co-founder and director of The Filo Project said.
“This is fundamentally unfair and means families can’t afford as much dementia care as they need,” Ms Price continued. “We’re here today at Downing Street calling for the Government to put this right in the upcoming Spring Budget by changing VAT rules so not-for-profit organisations like us who provide welfare support and care are exempt from having to charge VAT. Families would feel an immediate benefit.”
The campaign has gained the support of over 1,000 people who have signed a petition including Totness MP Anthony Magnall and Exeter MP Ben Bradshaw.
Professor Martin Green OBE, Chief Executive of Care England, said: “The disparity in the VAT treatment of charities and non-charities for community services in England is something the Government needs to look hard at. This must be examined alongside both residential and domiciliary care providers who are currently unable to recover VAT as welfare services are exempt.”
“This means social care providers are unable to recover input VAT on certain services. If the Government were to zero rate VAT for welfare services or endorse welfare services restructuring, it would inject hundreds of millions of pounds in additional funds into the social care sector, directly to struggling care providers. This process has already been adopted by a number of Local Authorities in England and Scotland, but no Government position has been taken, meaning other Local Authorities and the NHS are spending millions on VAT consultancy and advice to navigate the current confusing and inconsistent VAT policy.”
“We know the challenging position Local Authorities are in currently. A change to VAT policy for social care would see between £30 to £50 per week added to every weekly care package funded by Local Authorities and the NHS equivalent to a 4-6% fee uplift and go a significant way to help solve the social care funding crisis.”
