Private healthcare could soon follow private education by becoming subject to VAT as the Government continues to look for new ways to raise revenue, according to a leading VAT advisor.
The removal of independent schools’ exemption from VAT and business rates relief comes into effect from next month - and Owen Burn, director, VAT at professional services and wealth management group Evelyn Partners, says private healthcare could be next.
He was speaking as part of a panel at the firm’s annual Insights For Finance Leaders seminar, held at its Bristol office.
The panel was chaired by Jenny Tragner, R&D partner at Evelyn Partners in Bristol, and also included Becky Foley, director, business tax, and Stephen Greenaway, director, employee solutions.
Owen Burn said that since Brexit, the UK Government can amend its VAT system without recourse to overarching EU law, which mandated that certain VAT exemptions must be maintained. This means that it can remove any VAT exemptions or make changes to the UK VAT system as it sees fit.
“The recent Budget was very quiet in terms of VAT changes but the measure on independent schools does beg the question ‘what’s next?’” he said.
“The areas which are currently tax exempt that the Government could look to tax are most likely to be private healthcare services, betting and gaming, or lotteries. These last three are already subject to duty, albeit typically less than the standard 20 per cent rate of VAT but replacing the duty with VAT would increase the tax take.
“Therefore, private healthcare is the most likely target for VAT, on the basis that the Government could argue there are similarities with private schools, in that access to private healthcare is available only for those who can afford it.”
Paul Stagg, director in the corporate finance team at Evelyn Partners in Bristol, also spoke at the event, on M&A trends for 2025, while Ben Hamar, director in the national technical assurance group, gave a presentation on financial reporting changes.
“There is still a lot of ‘dry powder’ within private equity that needs to be deployed over the next five years, and they are especially keen to back strong management teams with high growth potential,” said Paul Stagg.
“Sectors such as leisure, hospitality and events, professional services/consultancy and tech, are all popular at the moment and are achieving good multiples.”
