VAT on Private Healthcare and Non-NHS Income in a GP Practice

VAT on private healthcare turns on why a service is provided, not on who pays for it. Genuine clinical care is exempt. Reports, certificates and medicals written so a third party can make a decision are standard-rated, and so is purely cosmetic work. Only the standard-rated part counts towards the £90,000 registration threshold, which is why most GP practices never register and some must. Registration mechanics sit in the GP practice VAT registration guide.

What counts as private and non-NHS income for a GP practice?

The scope here is income your practice earns outside its NHS GMS, PMS or APMS contract and outside dispensing, paid by patients, employers, insurers, solicitors and other third parties rather than by the NHS.

One distinction needs stating up front. This page is about your practice's non-NHS income as practice trading income: where those streams sit in the partnership accounts, how they are taxed on the partners' profit share, and the VAT consequence at practice level.

It is not about an individual hospital consultant or GP managing their own NHS salary alongside their own private work. For that position (how a doctor's personal earnings stack up, their own pensionability, whether to incorporate), see the guide to private practice tax and NHS and private income. It is not repeated here.

These streams matter out of proportion to their size. Your core NHS contract income is outside the scope of VAT and most of your clinical work is exempt, so a GP practice can run for years without a VAT question arising. The private and non-NHS streams are the only income that can be standard-rated, and so the only income that can build towards a registration obligation.

Is there VAT on private healthcare, or is medical care exempt?

The exemption sits in VATA 1994 Schedule 9 Group 7. Items 1 to 3 exempt services supplied or directly supervised by registered medical and health professionals, and Item 5 exempts a deputising doctor's services. To qualify for the VAT exemption, medical care must meet two conditions at once.

The service must be within the profession in which the practitioner is registered to practise. And its primary purpose must be the protection, maintenance or restoration of the health of the person concerned. Miss either condition and the supply is taxable.

The VAT healthcare exemption does not depend on who pays. NHS-funded and privately funded care are treated the same way, because the test looks at purpose rather than at the funder. So VAT on private healthcare in the UK is decided service by service, exactly as for NHS work.

That is why the private healthcare VAT position of two practices with identical turnover can differ entirely. What decides it is the work you actually do, and the billing follows.

Where a supply falls outside the medical exemption, VAT is due at the standard rate. HMRC's guidance on VAT, medical services and health professionals sits in VAT Notice 701/57. The doctors' detail is in the VAT Health manual at VATHLT2010 and VATHLT2130, and VAT on healthcare is not a single rule in either of them.

Which private and non-NHS income streams does a GP practice earn?

Each of your streams needs three things settled: what it is, how it is taxed, and its VAT line. The tax answer is the same every time (practice trading income, taxed on the partners' profit share, not NHS-pensionable), so the VAT line carries the detail below.

Private medicals and forms

Examples include insurance medicals, pre-employment and fitness medicals, HGV, LGV and taxi-driver medicals, sports and diving medicals, fitness-to-fly assessments, adoption and fostering medicals, and private sick notes and forms. VAT: most are standard-rated, because their primary purpose is to inform a third party's decision. Pre-employment medicals and full driving-fitness assessments both moved to the standard rate on 1 May 2007 and are worth flagging explicitly, because practices routinely assume anything medical is exempt.

The common thread is that your patient is examined not to treat them but to certify something: that they are fit to drive a lorry, fit to take up a job, fit to dive or fly. The clinical skill involved does not make your supply exempt; the purpose does, and the purpose is the third party's decision.

The contrast is sharp within one patient. Their consultation on Monday because they feel unwell is exempt care. Their HGV medical on Thursday is standard-rated, because it exists for the licensing body. If your practice runs a steady volume of medicals, treat the category as standard-rated by default and identify the genuinely therapeutic exception, rather than the other way round.

Insurance and medico-legal reports

Examples include insurance reports on a patient, GP factual reports for solicitors, medico-legal and expert-witness reports, court reports and capacity assessments for legal purposes. VAT: standard-rated. VAT Notice 701/57 puts medicals, reports and expert-witness testimony for the judicial system at the standard rate, and says so even where the work is for the family courts.

This is where the purpose test bites hardest and where practices most often get it wrong. The instinct is to treat anything a doctor writes about a patient as medical, and so exempt. The test asks a different question: what is the report for?

A report written so an insurer can decide whether to pay a claim is enabling someone else's decision, not treating the patient. It falls outside the VAT medical exemption and is standard-rated, even though only a doctor could write it.

Two carve-outs are worth knowing. A report that is genuinely part of the patient's own care can be exempt. And VAT Notice 701/57 keeps certain insurance medicals exempt where the principal aim is to assist in restoring the individual's health, which can cover income-protection and motor-injury work. So an insurer as the payer is not by itself your answer.

Travel clinics and travel vaccinations

VAT: the vaccination itself is medical care and is exempt, because administering a travel vaccine protects the patient's health. The international certificate of vaccination is part of that same exempt supply. HMRC's doctors' table kept travel vaccination exempt both before and after 1 May 2007, so this is settled ground rather than a judgement call.

Goods sold alongside the clinic are a separate question. Anti-malarial tablets supplied on a private prescription follow the private-prescription rule and can be standard-rated. The guide to dispensing practice income, accounts and tax covers that fork.

Minor surgery and minor procedures done privately

Where privately funded minor surgery is done for a clinical (therapeutic) reason it is exempt medical care. Where it is purely cosmetic with no therapeutic purpose it is standard-rated. VAT Notice 701/57 puts it precisely: cosmetic services are exempt where undertaken as an element of a health care treatment programme.

NHS-commissioned minor surgery is an enhanced service rather than private income. The guide to enhanced services and GP practice income tax covers that stream.

Occupational health services

Some practices sell occupational health to local employers, and this is the stream most often coded wrong, because the categories split finely. VAT Notice 701/57 treats pre-employment medicals as taxable and risk assessments as generally taxable. But in-service health screening aimed at protecting employee health is exempt, and so are post-employment medicals assessing fitness for work.

Two further calls sit inside that split. A medical to establish eligibility for a pension scheme is taxable. Training and advice on health issues is exempt.

The practical consequence is that one of your occupational health contracts can contain both liabilities. Price and code it line by line when you sign it, because retro-fitting the split across a year of your invoices is far harder than setting it up once.

Signing fees, certification and administrative work

Examples include passport countersignature, certifying documents, firearms certificates and cremation work. VAT: largely standard-rated where there is no care element. VAT Notice 701/57 names countersigning passport applications and providing character references as general administrative services at the standard rate, and paternity testing as standard-rated too.

Cremation certificates are the exception. HMRC's doctors' table shows them exempt both before and after 1 May 2007. Liability here is genuinely item by item, so check each one rather than applying a category rule to your whole fee list.

Other private clinical work

Private GP consultations and self-pay clinics, where the purpose is genuinely the patient's health, are exempt medical care. That reinforces the default in both directions: assuming all private work is taxable is as wrong as assuming all medical work is exempt.

How is private and non-NHS income taxed?

It is all practice trading income. Whatever you invoice and collect for private work is part of the partnership's trading profit, taxed on the partners through the SA800 and their personal SA104, exactly like NHS income. There is no separate regime, and a partner is taxed on the allocated share rather than on drawings.

The complete guide to GP partnership tax sets out the mechanics. The guide to GP partnership profit sharing and tax planning covers how the income is shared between you.

It is not NHS-pensionable. Private and non-NHS income is not NHS-derived, so it builds no NHS pension. The Type 1 Annual Certificate of Pensionable Profits, completed by a GP provider or partner, captures NHS-derived profit only. The guide to GP pension contributions and tax relief covers what is and is not pensionable.

Nothing external chases it. Private income does not come through Primary Care Support England, the body that administers GP pension records and payments in England (a local health board in Wales, with separate arrangements in Scotland and Northern Ireland). NHS income arrives in known amounts on a PCSE statement your practice can check. Private income arrives in dribs and drabs, sometimes as cash at reception for a form, sometimes invoiced and sometimes not.

That makes it the stream most often under-recorded. Without a consistent routine, money simply leaks: a report written but never billed, a medical fee taken at the desk and not banked, a travel-clinic payment coded inconsistently. Weak recording also breaks your VAT threshold monitoring, because you cannot see how much standard-rated income the practice is actually generating. The GP bookkeeping guide and the GP accounting guide cover the capture routine.

Costs are deductible normally. Expenditure incurred to earn private income is deductible against practice profit on wholly-and-exclusively principles, and the complete list of GP tax deductions covers what qualifies.

The purpose test that decides VAT on medical services

A supply is exempt only where its principal purpose is the protection, maintenance or restoration of the patient's health and it is within the doctor's registered field (VATA 1994 Schedule 9 Group 7, Item 1). Where the primary purpose is a third party's decision, or the work is purely cosmetic, it is standard-rated.

HMRC's VAT Health manual at VATHLT2010 states this as a two-part test and calls it a subjective one. The same nominal service can therefore land differently on its facts, which is why your notes matter as much as your fee code.

The line was drawn where it is by the European Court's ruling in d'Ambrumenil (Case C-307/01), which HMRC applied from 1 May 2007. That date is why a practice manager who learned the rules before then remembers a different answer.

Pre-employment medicals, driving-fitness medicals, coroner's post-mortem work, Benefits Agency examinations and disability reports were all exempt before 1 May 2007 and standard-rated after it. If your fee schedule predates that change, it is wrong.

The doctors' liability table at VATHLT2130 still presents liability in two columns, before and after 1 May 2007. HMRC carried a last-updated stamp of 19 August 2026 on that page when it was checked for this guide. So the table is maintained, and the 1 May 2007 change is still the line it draws.

Medical services VAT: which supplies are exempt and which are standard-rated

VAT liability of services provided by doctors. Sources: HMRC VAT Health manual VATHLT2130 Table 3 (position from 1 May 2007, page last updated 19 August 2026) and VAT Notice 701/57 (last updated 13 August 2026).

Service	VAT liability	Note
Private consultations, treatment and diagnostic tests	Exempt	Purpose is the patient's health
Therapeutic minor surgery for non-NHS patients	Exempt	Cosmetic-only work is standard-rated
Travel vaccination and the international certificate	Exempt	Unchanged before and after 1 May 2007
Cremation certificates	Exempt	Unchanged before and after 1 May 2007
Sick notes and certain adoption reports	Exempt	VAT Notice 701/57
In-service health screening; post-employment fitness-for-work medicals	Exempt	VAT Notice 701/57, occupational health
Pre-employment medicals	Standard-rated	Changed on 1 May 2007
Full driving-fitness medicals (HGV, LGV, taxi)	Standard-rated	Changed on 1 May 2007
Medico-legal work, expert-witness testimony, court reports	Standard-rated	Including work for the family courts
Coroner's post-mortem work	Standard-rated	Changed on 1 May 2007
Paternity and DNA blood tests	Standard-rated	Not aimed at diagnosis or treatment
Passport countersignature and character references	Standard-rated	General administrative services
Purely cosmetic procedures	Standard-rated	Exempt only as part of a treatment programme

Read the table as a shortcut to the rule rather than as the rule itself. Liability is decided supply by supply against the purpose test, so if your service is not listed, ask who the work is for and what it is meant to achieve.

When does a GP practice have to register for VAT?

Registration is triggered by taxable turnover, meaning standard-rated supplies plus any zero-rated dispensing turnover. Exempt clinical income and outside-the-scope NHS contract income are excluded entirely.

The threshold is £90,000 of taxable turnover in any rolling 12 months, unchanged since 1 April 2024, and the deregistration limit is £88,000. You must register within 30 days of the end of the month in which you cross it. The GP practice VAT registration guide covers how.

Take a six-partner practice with £160,000 of exempt private clinical work and four standard-rated streams in the year to 31 March 2027. Insurance and medico-legal reports bring in £41,000, and pre-employment, HGV and taxi medicals another £26,000. Fitness-for-work reports for local employers bring in £18,000, and passport countersignatures and other administrative fees £6,000.

Add only the standard-rated streams: £41,000 plus £26,000 plus £18,000 plus £6,000 is £91,000. The £160,000 of exempt care does not count, and neither does the NHS contract. So the practice is £1,000 over and must register.

What changes the answer is the composition of the occupational health work. If that £18,000 were in-service health screening rather than employer fitness reports, it would be exempt, taxable turnover would be £73,000, and no registration would arise.

Can a VAT-registered practice reclaim VAT on its costs?

Partly. A registered practice making both exempt and taxable supplies operates partial exemption. You can reclaim input VAT on costs relating to your standard-rated work, but not on costs relating to exempt care, subject to the de minimis test.

The de minimis rules in the VAT Regulations 1995 broadly allow full recovery where your exempt-related input VAT averages no more than £625 a month and £7,500 a year and is no more than 50% of total input VAT. Above those limits, the exempt-related input VAT is not recoverable.

The honest expectation is modest. Your recoverable input VAT relates only to the taxable side, mainly the cost of producing reports and medicals, which is usually a small slice of practice spend. The bulk of your costs sit against exempt clinical work and stay irrecoverable.

Is registering for VAT worth it for a GP practice?

For most practices registration follows automatically from crossing £90,000 of taxable turnover, and no decision arises. Where there is a decision to make, the two sides are short.

In favour: you reclaim input VAT on the taxable side, and the position is put on a proper footing before HMRC finds it. A dispensing practice registers voluntarily for a different reason again. Dispensed NHS prescription drugs are zero-rated under VATA 1994 Schedule 8 Group 12 Item 1 rather than exempt, which is what preserves input-VAT recovery, while drugs personally administered during treatment are exempt and private-prescription drugs are standard-rated.

Against: quarterly returns and Making Tax Digital obligations, a partial exemption calculation every period, and the risk of a wrong liability call on a stream you never classified. You also add VAT to your price for insurers and solicitors who cannot always recover it.

The planning that actually pays is monitoring your standard-rated turnover monthly, so you see the threshold coming rather than discovering it in your year-end accounts and registering late.

What records defend a VAT exemption claim?

If liability turns on purpose, then your defence of an exemption is a documented purpose. For any supply you treat as exempt medical care, your clinical record should show the health reason for the intervention. That is what distinguishes therapeutic minor surgery from a cosmetic procedure carrying the same code.

There is no HMRC-issued VAT exemption letter or number for a GP practice, because exemption attaches to each supply rather than to the practitioner. So when an insurer or a solicitor queries a VAT-free invoice, what you send back is a short written statement of the liability position.

State three things: that the supply is exempt medical care under VATA 1994 Schedule 9 Group 7, that it is within the doctor's registered field, and that its principal purpose is the protection, maintenance or restoration of the patient's health. Keep a copy filed against the invoice.

Your mixed contracts need the same discipline at the front end. An occupational health agreement covering both taxable pre-employment medicals and exempt in-service screening should say which service is which, so your invoice split follows the contract rather than a later reconstruction.

Where GP practices get VAT in healthcare wrong

• Under-recording private income, because it does not come through PCSE and nothing external chases it.
• Assuming all medical work is exempt, and so missing a registration obligation once reports and medicals cross £90,000.
• Assuming all private work is taxable, and so charging VAT on genuine clinical care that is exempt.
• Treating travel-clinic vaccination income as standard-rated (it is exempt) or report income as exempt (it is standard-rated).
• Applying one liability to a whole occupational health contract, when VAT Notice 701/57 splits it by service.
• Not agreeing who in the partnership earns or keeps private income, which is a partnership-agreement point rather than a tax rule.

That last one deserves more than a bullet. In many practices particular private work sits with particular partners: the GP who holds your occupational health contract, or the one writing most of your medico-legal reports. Your partnership agreement should say whether that income is pooled and shared like everything else, or retained by the partner who earns it.

There is no single right answer, but there is a wrong outcome: an arrangement never written down and then disputed when that partner leaves or the volumes change. Settle it in the agreement and account for the income consistently with what it says.

The guide to GP partnership profit sharing and tax planning covers how prior shares and special allocations are structured. The guide to reading and reconciling PCSE statements covers the NHS payments that do flow through PCSE.

Related reading on healthcare VAT and GP practice income

Registration and return mechanics, the streams that sit next to this one, and the individual doctor's position are covered separately:

• GP Practice VAT Registration
• Dispensing Practice Income, Accounts and Tax
• Reading and Reconciling Your PCSE Statements
• Private Practice Tax: NHS and Private Income
• GP Practice Management

This guide is general information and not advice for your specific circumstances. For tailored support, see our services for GPs or get in touch with our medical accounting team.