VAT: Medical services directly supervised by pharmacists in the UK
Published 30 March 2023
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Who is likely to be affected
Registered pharmacists and National Health Service Trusts.
General description of the measure
The measure extends the VAT exemption for healthcare to include medical services carried out by staff directly supervised by registered pharmacists in the UK.
Policy objective
The policy objective is to:
- align the VAT treatment of these services with other registered health professionals
- encourage community pharmacists to deliver a wider range of clinical services to the public
- ensure VAT legislation keeps up with changes to how the NHS operates
The measure will ease the pressure on GPs and the NHS and simplify the existing VAT rules by allowing pharmacists to exempt directly supervised medical services from VAT.
Background to the measure
Under current VAT legislation supplies of medical services made by certain registered health professionals are exempt from VAT.
This exemption extends to non-registered persons providing medical services directly supervised by registered health professionals. Services provided by pharmacists are also exempt. However, the exemption does not currently include services carried out by non-registered persons directly supervised by pharmacists.
Introducing this measure will:
- bring the VAT treatment of pharmacists in line with other registered health professionals providing medical services to the public
- encourage pharmacies to offer a wider range of clinical services to the public and help ease the pressure on GPs and the NHS
Detailed proposal
Operative date
This measure will have effect from 1 May 2023.
Current law
Our current law is as follows:
- VAT Act 1994 Section 31(2) Exempt supplies and acquisitions
- VAT Act 1994 Schedule 9 Group 7 Health and Welfare Item 3 and Note 2A
Proposed revisions
Legislation will be introduced by statutory instrument by using the powers under VAT Act 1994 Section 31 to extend the VAT exemption under VATA 1994 item 3 of Note 2A Group 7 Schedule 9 to cover services directly supervised by pharmacists.
Summary of impacts
Exchequer impact (£ million)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| — | -5 | -10 | -10 | -10 | -10 |
These figures are set out in Table 4.1 of Spring Budget 2023 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Spring Budget 2023.
Economic impact
This measure is not expected to have any significant macroeconomic impact.
Impact on individuals, households and families
There is expected to be no impact on individuals, family formation, stability or breakdown. The measure only affects businesses.
Equalities impacts
It is not anticipated that there will be impacts on those groups sharing protected characteristics.
Impact on business including civil society organisations
This measure will have a positive effect on:
- 11,200 community pharmacies in England
- 1,250 community pharmacies in Scotland
- 716 community pharmacies in Wales
- 528 community pharmacies in Northern Ireland
These pharmacies could provide medical services carried out by staff who are directly supervised by a registered pharmacist and help ease the pressure on GPs and the NHS. As a result, this will benefit public access to clinical services.
One-off costs may include familiarisation with the changes or updating software to enable the directly supervised services to be treated as VAT exempt. There are not expected to be any continuing costs.
Customer experience is expected to remain broadly the same as it does not significantly alter how businesses would interact with HMRC.
This measure is not expected to impact civil society organisations.
Operational impact (£ million) (HMRC or other)
Costs to HMRC of implementing this change are expected to be negligible.
Other impacts
HMRC has considered other impacts, and none have been identified.
Monitoring and evaluation
HMRC do not believe that any monitoring or evaluation is needed for this measure.
Further advice
If you have any questions about this change, email Imran.kalam@hmrc.gov.uk or joyce.henningham@hmrc.gov.uk