Right at Home UK’s CEO, Ken Deary, is a founding member of a consortium of homecare providers campaigning to make social care services zero-rated for VAT. In this blog, we will discuss the benefits this significant cost saving can bring to providers operating in the social care sector.
Currently, goods and services provided by regulated social care organisations are exempt from VAT, meaning that they do not charge VAT on their services. However, their current VAT status means they cannot reclaim VAT on operating expenses, which includes training, utilities, rent, repairs and many other general running costs.
The VAT element of a provider’s expenses can add up quite considerably. For the average provider, which is important to note is usually an SME (Small and Medium-Sized Enterprise), the consortium has calculated that the VAT cost in a year would be around £20,000, for an established care business, delivering around three to four thousand hours of care per week. For businesses operating as a part of a franchise, these local offices are independently owned and operated and are therefore also SMEs.
Importantly, the consortium is committed to reinvesting any VAT savings as a result of this campaign, directly back into their businesses.
How can this cost saving benefit CareGiver recruitment and retention?
Recognising and rewarding CareGivers
The current coronavirus pandemic has certainly put a spotlight on the sector and there is a much greater appreciation for the outstanding role CareGivers are doing, day-in day-out. To be able to better reward CareGivers and show our appreciation for their tremendous efforts would be fantastic.
Investing in training
As well as increasing rates of pay, zero-rated VAT status for social care would support providers to invest in further training opportunities and qualifications for carers, which in turn would support with staff retention.
How can this cost saving benefit the Client experience?
Investing in technology to support Client wellbeing
On the Client side, as providers of high quality care, we are continuously looking to improve the Client experience. One way providers can do this is by investing in equipment, for example a mobility vehicle, enabling even more people to get out into their local community and interact with others outside of their home.
Providers can continue to play their part in preventing hospital admissions or indeed, readmissions, by investing in and utilising technology which can support with detecting health issues earlier. The social care sector plays a key role in alleviating a huge amount of pressure on an already stretched NHS, by supporting people to remain living safely and independently at home.
What would the long-term impact of this change be?
By taking action now, the Government can support us to future proof the sector for years to come. The cost to the Government to make VAT zero-rated for all social care providers, in all settings, is around £120 million a year which, relatively speaking, would be a small contribution for the Government. But for a number of smaller, independent businesses operating in the sector, this would be the difference between remaining opening or being forced to close.
With an ageing population, demand for our services will only continue to increase so it’s vital our sector is supported in the here and now so we in turn can continue delivering the much needed high quality care and support that so many rely on.
If you would like to learn more about this campaign, please follow the Twitter account @0VATSocialCare.