VAT and Medical Services: A Guide for Healthcare Professionals

If you're a registered healthcare professional providing services privately — whether to sporting organisations, employers, insurance companies, legal firms, or individual patients outside the NHS — VAT is something you cannot afford to ignore.

This applies across the board: doctors and surgeons, nurses, physiotherapists, dentists, osteopaths, chiropractors, pharmacists, and a wide range of other registered health professionals can all be caught by these rules. It doesn't matter what your specialism is — if you're providing services privately and your income crosses certain thresholds, VAT will be relevant to you.

The common assumption is that medical services are simply exempt from VAT. In many cases that's true. But the rules are more nuanced than most people realise, and getting it wrong can have serious financial consequences. HMRC has been increasingly active in this area, and the line between what is exempt and what isn't can shift depending on the exact nature of the service you're providing.

This guide explains the rules in plain English, drawing on HMRC's own VAT Notice 701/57 and related internal guidance.

The Basic Rule: What Makes a Medical Service VAT Exempt?

Under VAT legislation (VATA 1994, Schedule 9, Group 7), medical and healthcare services provided by a registered health professional can be exempt from VAT. But "exempt" doesn't mean automatically exempt for everything a health professional does. HMRC sets out two conditions that must both be satisfied.

Condition 1: You must be registered on a statutory register. The service must be provided by someone registered under the relevant legislation for their profession. HMRC's VAT Notice 701/57 covers a broad range of health professionals, including — but not limited to — doctors (GMC), nurses and midwives (NMC), physiotherapists and other allied health professionals (HCPC), dentists (GDC), osteopaths (GOsC), chiropractors (GCC), and pharmacists (GPhC). If you are registered on one of these statutory registers and acting within your registered profession, you satisfy this condition. This isn't the tricky part.

Condition 2: The primary purpose must be to protect, maintain, or restore health. This is where it gets more complicated. The service must be principally aimed at the health of the individual patient — not at providing information to help a third party make a decision. HMRC calls this the "therapeutic purpose" test.

This distinction is set out explicitly in HMRC's VAT Notice 701/57, and it's the key to understanding why some of your services may be fully VAT exempt while others could attract VAT at 20%.

The Therapeutic Purpose Test: Why It Matters

Think of it this way. If you're treating a patient — diagnosing an injury, managing a health condition, providing emergency care, delivering a course of physiotherapy — the purpose of that service is the health of the individual in front of you. That's therapeutic care, and it's VAT exempt.

But if you're examining someone in order to produce a report that helps a football club decide whether to sign a player, or to help a boxing promoter decide whether a fighter is cleared to compete, or to assist a solicitor in a personal injury claim, the primary purpose of that service is to inform someone else's decision. The health of the individual is, in a sense, incidental. That's where HMRC draws the line — and where VAT becomes chargeable.

Importantly, this test applies to all registered health professionals equally — not just doctors. A physiotherapist writing a report for a legal claim, or a nurse providing pre-employment screening for an employer, faces exactly the same analysis.

This is not a technicality. It's a fundamental distinction that runs through all of HMRC's health and medical VAT guidance.

Services That Are VAT Exempt

Where the principal purpose of your work is protecting, maintaining, or restoring the health of the individual, your services will generally be VAT exempt. These examples span a range of professions and settings:

• Treating and diagnosing conditions: Whether you're a doctor diagnosing a fracture, a physiotherapist treating a ligament injury, or a nurse managing a patient's recovery, the care itself is VAT exempt. The purpose is the patient's health.
• Post-injury rehabilitation: Ongoing rehabilitation programmes and recovery care provided by physiotherapists, sports medicine professionals, and others are exempt.
• Preventative health monitoring and ongoing care: Routine health checks, chronic condition management, and ongoing patient care are exempt regardless of the setting.
• Matchday and event-day emergency care: Providing medical cover at a match, sporting event, or public gathering and treating any injuries that occur is exempt. The purpose is to treat — not to assess fitness for regulatory purposes.
• Reports written to protect the patient's health: If you write a report advising an employer or club that a patient should not carry out certain activities due to a specific injury or condition, HMRC accepts this as exempt. The purpose is protecting the individual's health, not informing a commercial or legal decision.

These services are exempt regardless of the size of your turnover. If all of your income consists of therapeutic medical care of this kind, you would not be required to register for VAT even if your annual income exceeds the £90,000 VAT registration threshold — because exempt income does not count towards that threshold.

Services That Are Standard Rated (20% VAT)

HMRC's VAT Notice 701/57 makes clear that where a service is provided principally to enable a third party to make a decision, and there is no genuine element of therapeutic care, the supply is standard rated. This applies across all health professions. Common examples include:

Fitness-to-compete certificates. Pre-fight medicals required by the British Boxing Board of Control, or pre-season fitness assessments required as a condition of a player being permitted to participate, are standard rated. The purpose of these assessments is to allow the governing body, the promoter, or the club to decide whether the individual may compete. The patient's health is assessed as a means to that end — not as an end in itself.

Transfer and pre-signing medicals. Where you conduct a medical examination to allow a football club to decide whether to sign or retain a player, HMRC treats this as a standard rated supply. The principal purpose is to inform a commercial and contractual decision, not to treat or protect the player.

Medico-legal reports. Reports prepared for litigation, insurance claims, personal injury proceedings, or any regulatory or legal purpose are standard rated. HMRC is explicit on this point. Even attendance as an expert witness at court or tribunal is standard rated. This applies equally whether the report is written by a doctor, a physiotherapist, a nurse, or any other health professional — the purpose of the service is to assist a legal or judicial process, not to deliver healthcare.

Driving and employment medicals. Reports to determine whether someone is fit to hold a driving licence, or medicals conducted to assist an employer in deciding whether to engage someone, are standard rated. Post-employment occupational health work — assessing an existing employee's fitness for specific tasks, for example — may be exempt, but pre-employment medicals are not.

What About Insurance Medicals?

Insurance medicals sit in a slightly different position. They don't qualify as exempt medical care, but HMRC accepts that reports provided to insurance companies in connection with setting up a policy or handling a claim may qualify for a separate exemption under the insurance provisions in VATA 1994, Schedule 9, Group 2. This needs to be assessed on a case-by-case basis, and it is worth discussing with your adviser if insurance work forms a significant part of your income.

If You Work Through a Limited Company

This is an area where additional caution is needed, and one that HMRC has challenged in a number of cases. It applies to any health professional — not just doctors — who provides services through a company rather than in their personal capacity.

HMRC's position — backed by case law — is that where a health professional provides services through a company, the company may be making a supply of staff rather than a supply of medical care. If it's a supply of staff, it's standard rated. This argument succeeded in Mainpay Ltd v HMRC [2021], where the Upper Tribunal found that because the company did not exercise control or supervision over clinical treatment, it was supplying labour rather than healthcare.

However, this is not a universal rule, and your personal circumstances may distinguish your position. If you are the sole director and only practitioner in your company, you personally perform all the work, and your company takes direct responsibility for the provision of healthcare, the position is stronger. The tribunal in Archus Trading Limited found in favour of a company whose practitioners operated with full clinical autonomy and personal responsibility for patient care.

HMRC's own guidance (VAT Notice 701/57, Section 6.7) also makes clear that the VAT liability of a supply is not determined by the contract alone — the actual, day-to-day reality of how the services are delivered matters. This cuts both ways: a well-drafted contract that genuinely reflects autonomous clinical practice supports an exempt position; one that doesn't match reality will not protect you.

The practical recommendation: If you operate through a limited company, your contracts with clients should make clear that the company is engaged to provide healthcare and treatment, that you as the sole practitioner retain full clinical responsibility, and that the client does not exercise direction or control over your clinical decisions.

VAT Registration and Partial Exemption

If your income is a mixture of VAT exempt and standard rated services, you are what HMRC calls a "partially exempt" business.

The important point is that only your taxable income counts towards the £90,000 VAT registration threshold. Your exempt income (therapeutic medical care) does not count. You are required to monitor your taxable turnover on a rolling 12-month basis — not just calendar years. If the taxable element exceeds £90,000 in any rolling 12-month window, you must notify HMRC and register within 30 days.

If you do become VAT registered, partial exemption rules apply:

• You must charge VAT at 20% on your taxable supplies (fitness certificates, pre-fight medicals, medico-legal reports, and similar)
• You do not charge VAT on your exempt supplies (therapeutic care)
• You can only recover input VAT on business costs that relate to your taxable supplies — VAT on costs attributable to exempt work is not recoverable
• Where costs are used for both taxable and exempt activities (shared overheads, for example), the input VAT must be apportioned using an approved method set out in VAT Notice 706

Partial exemption is genuinely complicated to administer correctly. Getting the apportionment wrong can result in either overclaiming input VAT (which HMRC will challenge) or underclaiming (which costs you money). If you reach the registration threshold, taking specialist advice before you file your first return is strongly recommended.

A Practical Summary

What Should You Do Now?

The starting point is to look honestly at the range of services you provide and categorise each one. If your income is entirely therapeutic care, your VAT position is likely straightforward — but it is still worth confirming this with a specialist, particularly if you operate through a company.

If your work includes any fitness certificates, transfer medicals, medico-legal reports, or similar — regardless of your profession — you need to be tracking your taxable turnover carefully and ensuring that the VAT treatment on your invoices is correct.

At Companies999, our accountancy team works with healthcare professionals across a range of disciplines. We can help you review your VAT position, assess whether your company structure supports an exempt supply, and advise on registration and partial exemption if relevant to your situation. We can also review your contracts to ensure they are drafted in a way that supports and reflects your actual clinical practice.

Get in touch if you would like a review of your VAT position. The earlier you address this, the simpler it is to resolve.

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This article is based on HMRC's VAT Notice 701/57 (Health professionals and pharmaceutical products) and related HMRC internal guidance, current as at April 2026. VAT is a complex area and the treatment of individual supplies depends on the specific facts of each case. This article does not constitute VAT advice in relation to your particular circumstances.