Wes Streeting, the UK Health Secretary, has stated that the introduction of value-added tax (VAT) on private healthcare services will not be included in the upcoming Budget. This announcement follows recent reports suggesting that the Treasury was considering extending VAT to private healthcare services. When asked about the possibility on BBC Breakfast, Streeting firmly responded, “it’s not happening.”
Chancellor Rachel Reeves is facing scrutiny regarding the potential for tax increases, including VAT, when she presents her budget in November. Economists have suggested that the chancellor may need to raise taxes to adhere to her guidelines on borrowing to support public services. In her speech at the Labour conference, Reeves acknowledged the tough choices ahead and committed to maintaining fiscal responsibility by keeping “taxes, inflation and interest rates as low as possible.” However, she indicated that economic challenges, compounded by international events, have made decision-making more complex.
Labour’s election manifesto included a pledge not to raise VAT or make increases to National Insurance or income tax rates. Nonetheless, speculation persists regarding proposals to widen VAT application in order to generate additional revenue. Currently, most private healthcare services in the UK are exempt from VAT, with exceptions for specific cosmetic procedures. In contrast, private school fees recently became subject to VAT, with expected revenue of £1.7 billion annually by 2029/30.
Reeves has reiterated her commitment to the manifesto while acknowledging the shifting global landscape and its economic impacts. Former Labour leader Neil Kinnock has advocated for applying VAT to private healthcare to support NHS funding, claiming it would be largely popular among the public. The Good Growth Foundation has also indicated that such a policy could generate over £2 billion. Meanwhile, an independent analysis suggested a £50 billion gap in public finances that the chancellor may need to address, a figure she dismissed as exaggerated.
Source: https://www.bbc.com/news/articles/c0knr2dmn4mo?at_medium=RSS&at_campaign=rss