The VAT rebate for hospices could be worth more than £4m a year, according to Hospice UK, the membership body for hospice organisations.
George Osborne, the Chancellor of the Exchequer, announced in the Autumn Statement today that he would give VAT refunds for hospices to put them on a more level footing with NHS organisations, which are already able to recover VAT costs.
"Our hospice charities also make an enormous contribution to our communities," said Osborne. "They have long been subject to unfair rules that force them to pay VAT, when the NHS does not. I am today refunding the VAT that these hospice charities incur."
"It is only right that there is a level playing field between local hospice charities and other providers of palliative care. This rebate scheme recognises the unique contribution of charitable hospices to the health economy and the invaluable support of local people who give their time to support hospices through fundraising and volunteering.
"This positive change will help to relieve the considerable VAT burden on charitable hospices in the UK, enabling them to invest charitable funds in the delivery of front-line care and help them reach more terminally ill people and their families."
Osborne also announced that search and rescue and air ambulance organisations would, from April 2015, be able to claim VAT refunds on the purchases of goods and services for their non-business activities.
The Association of Air Ambulances said the move would save air ambulance charities about £10m over the next five years.
Clive Dickin, national director of the association, said the announcement would result not only in a financial saving but also in a relief of the administrative burden. "The use of trading companies and complex systems will no longer be required as a result of VAT relief," he said.
"In the March Budget, the Chancellor introduced a rebate for VAT and duty charged on aviation fuel where it is used in helicopter emergency medical service missions, for which we were extremely grateful.
"Today’s announcement comes after further lobbying – we have worked closely with our members, the All Party Parliamentary Group for Air Ambulances and the RNLI, to deliver the result on VAT."