Air ambulances and inshore rescue boats are to be exempt from paying VAT on fuel, bringing them in line with sea rescue services, the Chancellor announced in his Budget.
George Osborne said in his speech before parliament today that the government would introduce grants to air ambulance and inland safely boat charities to return the VAT on fuel collected by the Treasury. In practice this will mean that VAT on fuel is waived.
The Budget document, published alongside Osborne’s speech today, says: "Following HM Treasury’s review of the VAT air ambulance charities incur on fuel, the government will introduce a five-year grant of £65,000 per year for air ambulance charities across the UK. Following a consultation, the government will also introduce a further five-year grant of £1m per year for inland safety boat charities across the UK."
The announcement has been welcomed by rescue charities, which have lobbied for the move to bring them in line with sea rescue services – these have been exempt from VAT on fuel costs since 1977.
Clive Dickin, national director of the Association of Air Ambulances, which represents the majority of air ambulance operations in the UK, estimated that the rebate on aviation fuel would save many hundreds of thousands of pounds.
"The association still calls on the Chancellor to review all VAT provisions for UK charities and recognises that, while VAT on aviation fuel is a significant step, more than £800,000 per year is lost in irrecoverable VAT," said Dickin.
A spokeswoman for the RNLI said: "We welcome any move towards VAT relief for our life-saving charity and our colleagues in other emergency service charities. We now need to look at the detail of the Chancellor’s proposal in order to assess its impact."