A welcome package of targeted measures to tackle the Chancellor’s four E’s of Employment, Education, Enterprise, Everywhere. For the NHS facing workforce pressures and NHS waiting lists on the back of the pandemic, the most welcome announcement will be the employment measures to extend the Annual Pensions Allowance to £60,000 (from £40k) and the removal of the Lifetime Allowance entirely. This should directly impact decisions by clinicians around whether to continue to work in the NHS and help tackle backlog of elective procedures and general pressure on workforce.
Other sector highlights include:
- Measures to help parents return to work such as 30 hours free childcare per week for working parents of 9 month-olds April 2024 (extending the current relief that is available from age 2), increased funding to childcare providers and greater flexibility changing staff-to-child ratios from 1:4 to 1:5 for 2 year-olds in England from September 2023 following parliamentary approval.
- Musculoskeletal (MSK) interventions – The Government will scale up community MSK hubs in England so more people can access treatment, and provide free access to digital support tools hosted on the NHS website and app.
- The Government will modernise and digitise mental health services in England, providing wellness and clinical grade apps free at the point of use, pilot cutting-edge digital therapies, and digitise the NHS Talking Therapies programme.
- £10m extra funding over 2 years to support Medicines and Healthcare products Regulatory Agency (MHRA) to help accelerate patient access to treatments, as the MHRA looks at partnerships with trusted international agencies, such as in the US, Europe and Japan. This is with a view to providing simple, rapid approvals for medicines and technologies that have received their approval from 2024 with a swift approval process to be operational from 2024 for the most impactful new medicines and technologies - such as cancer vaccines and AI therapeutics for mental health.
In terms of relevant tax highlights aside from the pensions changes to annual and lifetime allowances these include:
A change to Capital Allowances impacting NHS subsidiary companies with the introduction of a new first-year allowances for qualifying expenditure incurred on plant and machinery for 3 years from 1 April 2023. Full expensing available for main rate expenditure (other than cars or plant and machinery for leasing) with a 50% allowance for special rate expenditure. This follows the end of the super deduction relief.
VAT relief for energy saving materials – Currently there are certain VAT reliefs available for the purchase and installation of energy saving materials by individuals and businesses. The Government will be seeking evidence on options to reform the VAT relief for the installation of energy saving materials in the UK. This review will consider the inclusion of additional technologies and the possibility of extending the relief to include buildings used solely for a relevant charitable purpose which could benefit charities supporting the NHS.
VAT treatment of Services supervised by pharmacists – The Government is going to extend the VAT exemption for healthcare services, to include exemption for medical services carried out by staff that are directly supervised by registered pharmacists. This simplification will take effect from 1 May 2023, and reflects the changes in how the NHS operates and is to support the Government’s commitment to ease pressure on GP services.
VAT relief extended for prescriptions through Patient Group Directions – The Government will extend the use of the zero rate of VAT on prescriptions for medicines supplied through Patient Group Directions. Where Patient Group Direction authorisation has been given for relevant personnel to issue specified medicines to designated populations or certain medical conditions, the charges for these prescriptions will now qualify for the zero-rate of VAT. This change would reduce the cost of drugs for the NHS, and will update the tax system in line with changes to patient healthcare delivery. This is another example of the Government’s commitment to ease pressure on GP services, and a clear financial incentive to use Patient Group Directions.
Plastic Packaging Tax rate – The Government has announced it will increase the Plastic Packaging Tax in line with CPI, from 1 April 2023.
NHS COS regime update - There were no announcements in the Budget about possible future changes to the COS VAT reclaim rules.