RCB/2/17 VAT—care homes and hospitals
Revenue & Customs Brief, Issue 2. 28 July 2017
1 Purpose of this brief
This brief sets out HM Revenue and Customs (HMRC) revised policy on the VAT zero rate for new buildings intended for use solely for a relevant residential purpose as care homes. It explains the distinction between buildings used as care homes (and similar facilities) which are eligible for zero rating and hospitals which are not.
2 Who should read this Brief
All parties involved in the construction and supply of buildings that are designed as care homes and hospitals.
The construction and first grant of an interest in a building, intended for use solely for a relevant residential purpose as a care home, is zero rated. A care home is one that provides residential accommodation with personal care to people in need of such care. Care may be needed because of:
— old age;
— past or present dependence on alcohol or drugs;
— past or present mental disorder.
The construction of a hospital is standard rated. However, just because an institution is badged as a