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HMRC internal manual

VAT Government and Public Bodies

HM Revenue & Customs
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Other local authority activities: welfare: Supporting People services

Exempt supplies

The vast majority of Supporting People services are unlikely to be subject to VAT. They are exempt when supplied by:

  • a charity (as defined in the DCLG joint statement, see VATGPB7170)
  • a public body such as a local authority, or
  • a state regulated private welfare body and

the support service consists of care, treatment or instruction designed to promote the physical or mental welfare of elderly, sick, distressed or disabled persons.

A state regulated private welfare body is a body regulated by the Commission for Social Care Inspection (formerly the National Care Standards Commission) or a similar regulatory body. But this does not include registered social landlords as they are not state regulated welfare institutions.

Support services are also exempt when the service is an ancillary element of a VAT exempt supply of residential accommodation.

Support services such as warden or caretaker services may also be exempt from VAT where:

  • the services for which the charge is made are a requirement of the tenancy agreement or other similar contractual arrangement by which the accommodation is granted
  • the charge is made to occupants of all the dwellings within the scheme, and
  • the services supplied in return for the charge are within the normal scope of a warden or caretaker’s activities.

Taxable supplies

It is important that those commissioning services, as well as the providers, are aware of the type of services on which VAT might be chargeable.

Exemption does not apply to:

  • support services supplied to a landlord by a sub-contractor (although the landlord’s onward supply of the support to the tenant may qualify for exemption), or
  • support services provided to owner occupiers (this is likely to include many current and future floating support services supplied to end users in self contained accommodation either rented or owner occupied).

These supplies will usually be standard rated. Therefore if a sheltered housing landlord supplies standard warden support to all its tenants as part of the tenancy agreement, the charge from the landlord to the tenant may be exempt from VAT. However, if the sheltered housing landlord subcontracts the support to a third party, the charges from the subcontractor to the landlord will be subject to the normal VAT rules. The service will therefore only be exempt from VAT if the subcontractor is a charity, public body or state regulated body.