Welfare services

By Tolley

The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Welfare services
  • What are welfare services?
  • Organisations covered by the exemption
  • What services constitute treatment, care or instruction?
  • Can routine tasks be exempt from VAT?
  • Protection and care of children and young persons
  • Spiritual welfare
  • Goods provided with welfare services
  • VAT registration
  • Charities – provision of welfare services below cost

This guidance note covers the VAT treatment of welfare services. This note should be read in conjunction with the Welfare – supplies of advice and information and Welfare – supplies of staff guidance notes.

What are welfare services?

Welfare services are services directly connected with the following activities:

  • the provision of treatment, care or instruction designed to promote the mental or physical welfare of the following people:
    • sick
    • elderly
    • disabled
    • distressed (excludes unemployed)
    • the protection and care of children and young persons (VATWELF3030)
    • provision of spiritual welfare by a religious institution if it is provided during a retreat or course of instruction (it must not be designed with the primary purpose of providing a holiday or recreation)

VATA 1994, Sch 9, Group 7, note (6) as amended by SI 2002/762 (subscription sensitive); 2006/112/EC , Article 132(1)(g) & (h); VATWELF3010; VATWELF3020; Notice 701/2  ; De Voil V4.146 (subscription sensitive)
Organisations covered by the exemption

The following organisations can exempt welfare services provided to eligible people:

  • charities
  • state regulated private welfare institutions and agencies
  • public bodies

VATWELF2000; VATWELF2060; VATWELF2010; VATA 1994, Sch 9, Group 7 Item 9, Notes 5, 7 and 8; SI 2002/762; SI 2003/24 (both subscription sensitive)

Welfare advice and information provided by one of the above organisations is liable to VAT at the reduced rate. For more information, see the Welfare – supplies of advice and information guidance note.

VATA 1994, Sch 7A, Group 9

The provision of welfare services by charities are exempt from VAT.

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