Written evidence submitted by British Association for Counselling and Psychotherapy (BACP), British Psychoanalytic Council (BPC), United Kingdom Council for Psychotherapy
The British Association for Counselling and Psychotherapy (BACP), British Psychoanalytic Council (BPC) and the United Kingdom Council for Psychotherapy (UKCP), would like to submit the following response to the Treasury Committee’s Inquiry into Tax after coronavirus.
BACP, BPC and UKCP are the leading professional bodies for counselling and psychotherapy with a combined membership of 65,000 counsellors, psychotherapists and psychotherapeutic counsellors across the UK. We support the highest possible standards and quality of care for the practice of psychotherapy and counselling and hold registers of practitioners, accredited by the Professional Standards Authority (PSA) under its Accredited Registers programme, accountable to Parliament. To be members of our PSA accredited registers, our registered and accredited counsellors and psychotherapists adhere to rigorous standards of proficiency.
Covid-19 and the importance of counselling and psychotherapy
As we move beyond the immediacy of the crisis, the anticipated demand for mental health services in the coming months and years is expected to rise sharply. The role of professional therapists is therefore now more important than ever, as the nation comes to terms with the mental health impact of changing work and family circumstances, financial insecurity, isolation, bereavement, societal breakdown and prolonged uncertainty caused by the Covid-19 outbreak. Counselling and psychotherapy will be critical as part of the response, in rebuilding our social fabric, helping to repair shattered communities and lives, and helping the nation return to normality. Psychological recovery is also a vital component in helping people and businesses return to work.
Most countries around the world have looked at introducing VAT reductions during the Coronavirus pandemic crisis. VAT reduction is one of the measures available to facilitate economic renewal, consumer confidence and access to essential services as part of a wider package of recovery interventions.
We urge you to support the removal of Value Added Tax (VAT) on the services provided by Counsellors and Psychotherapists. Any additional cost, particularly during these challenging times, represents a significant barrier to vulnerable people being able to access vital mental health support when they need it. A current anomaly also sees psychologists and psychiatrists being able to offer VAT exempt services, but not counsellors or psychotherapists.
Anything that provides or makes it easier for people to access mental health support in this time of crisis should be facilitated and encouraged and we call on you to support the extension of the VAT exemption to all individual PSA registered and accredited members and registrants who are qualified psychotherapists and counsellors.
We believe the cost to the Treasury to introduce this exemption would be small. However, it would result in significant benefits in helping the nation recover from the crisis.
Our organisations call on the Committee to support a recommendation extending the VAT exemption to all qualified, PSA registered and accredited psychotherapists and counsellors. This would remove a needless barrier to people accessing care and address the unfair disparity between physical and mental health, as well as between different types of mental health practitioner.
The anomaly of VAT on counselling and psychotherapy services
BACP, the BPC and UKCP have repeatedly called for the removal of Value Added Tax (VAT) on the services provided by Counsellors and Psychotherapists for a range of reasons.
Adding VAT to mental health services contradicts legislation on parity of esteem between physical and mental health and it highlights a significant and unfair anomaly between the treatment of health services provided, for example, by doctors, dentists, dieticians, opticians, and the ones offered by many mental health professionals.
According to an HMRC brief issued in 2009 when psychologists’ services became VAT exempt, 'medical care' is defined as any ‘service principally aimed at the benefit of the patient and at the protection, maintenance or restoration of health of the person concerned’, including mental health. Despite this, counselling and psychotherapy services, all provided for ‘the protection, maintenance or restoration of health of the person concerned’ remain subject to VAT. HMRC’s definition of medical care therefore should also include services such as counselling and psychotherapy.
Registered and accredited individual and group practice psychotherapists and counsellors are required to register for VAT when their income from the provision of mental health services exceeds, or is likely to exceed, £85,000 in a 12-month period. Clients are typically not VAT registered and therefore cannot reclaim VAT on psychotherapy fees, and while psychotherapists are entitled to claim a deduction for expenses incurred on any practice expenses (electricity, phone, rent etc), this ‘input VAT’ will not usually be significant.
This requirement acts as a barrier to the expansion of private affordable counselling and psychotherapy at a time when Government is promoting the expansion of the provision of mental health services and as highlighted earlier, will be needed to meet the expected demand post-pandemic. Counsellors and psychotherapists are also recognised in the NHS Long Term Plan as part of the 12 distinct psychological professions delivering NHS commissioned healthcare alongside psychologists and other mental health practitioners.
Another significant anomaly is the disparity of treatment within the mental health care professions. Whilst psychologists, art therapists and dance therapists who the government chooses to regulate by statute, offer VAT exempt services, counsellors and psychotherapists cannot. All our trainees receive the same minimum standards of professional training and once qualified they all provide the same level of highly professional and ethical psychotherapeutic services within their own professional sphere and working to their level of competence.
BACP, the BPC and UKCP believe that the VAT cut on counselling and psychotherapy services is long overdue and would remove a needless barrier to people accessing care. Anything that provides or makes it easier for people to access mental health support should be facilitated and encouraged. In view of the highlighted anomalies and expected increase in demand for mental health support in the aftermath of Covid-19, we urge the Committee to support our recommendation to extend VAT exemption to all individual PSA registered and accredited members and registrants who are qualified psychotherapists and counsellors.