Private work does not make your fees VATable. Private medical care is exempt from VAT under VATA 1994 Schedule 9 Group 7 Item 1, on the same footing as NHS care, so only the non-clinical streams count. You register once your taxable turnover passes £90,000 in a rolling 12 months, and the streams that get you there are medico-legal reports, expert witness work, pre-employment medicals and purely cosmetic treatment. NHS GMS and PMS income sits outside the scope of VAT and never counts.
Which Private Medical Work Is Exempt?
Work that passes two tests. VAT Notice 701/57 sets both, and both have to hold: the service is within the profession you are registered to practise, and its primary purpose is the protection, maintenance or restoration of health. Meet both and the supply is exempt whoever pays for it. Fail either and it is standard-rated at 20 percent.
So the test is not NHS against private, and it is not clinical skill. It is purpose. A consultation, a diagnosis, a course of treatment and a follow-up all protect or restore health, so all are exempt. A report that helps a court, an insurer or an employer reach a decision does not, so it is taxable, even though a doctor wrote it after examining the patient.
Which Private Work Is Standard-Rated?
Four streams account for almost every taxable pound in a medical practice: reports, expert witness work, cosmetic treatment with no health purpose, and the employer-facing half of occupational health.
| Income stream | Treatment | Counts towards £90,000? |
|---|---|---|
| NHS GMS and PMS funding, including Global Sum, QOF and enhanced services | Outside the scope | No |
| Private consultations, diagnosis and treatment | Exempt | No |
| Medico-legal reports for a court, insurer or solicitor | Standard-rated 20% | Yes |
| Expert witness opinion and testimony | Standard-rated 20% | Yes |
| Purely cosmetic treatment with no therapeutic purpose | Standard-rated 20% | Yes |
| Cosmetic work forming part of a health care treatment programme | Exempt | No |
| Pre-employment medicals for an employer's hiring decision | Standard-rated 20% | Yes |
| In-service health screening and fitness-for-work checks on existing staff | Exempt | No |
| Room hire as a licence to occupy land, unless opted to tax | Exempt | No |
Occupational health is the stream people get wrong, because it splits. Notice 701/57 treats a pre-employment medical as taxable, since the employer is using it to decide, while screening and fitness checks on existing staff protect the health of those staff and stay exempt. One contract can therefore carry both treatments and has to be apportioned. The same split logic runs through medico-legal and expert witness income and the wider question of which private and non-NHS income streams a practice runs.
When Exactly Must You Register?
On one of two tests, whichever comes first.
- The look back test. Total taxable turnover for the last 12 months goes over £90,000. This rolls, so it is checked every month end, not at your year end. You then have 30 days from the end of the month in which you crossed to register.
- The forward look test. You expect taxable turnover to exceed £90,000 in the next 30 days alone. You must then register by the end of that 30-day period, rather than waiting for a month end. Signing a single large medico-legal or occupational health contract can trigger this on its own.
Test the taxable slice, monthly. A practice can turn over several hundred thousand pounds, be nowhere near registration, and still be caught late because nobody was tracking the £40,000 of reports growing inside it. The deregistration threshold is £88,000, so a practice whose taxable work falls away can come off the register. Most GP practices are not VAT registered at all, because almost all of their income is exempt clinical care or out-of-scope NHS funding, and the ones that register are usually those with substantial medico-legal, occupational health or cosmetic work.
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Should You Register Voluntarily?
Usually no, for a mainly clinical practice. Voluntary registration below £90,000 buys you input VAT recovery and costs you 20 percent on every taxable invoice plus VAT returns under Making Tax Digital. Where income is dominated by exempt care, partial exemption blocks most of the recovery, so you take the cost and very little of the benefit.
It earns its keep in three situations: taxable work is a large share of your income; your taxable customers are VAT registered themselves and recover what you charge, so the 20 percent costs them nothing; or you dispense. A dispensing practice is the clear case, because NHS prescription drugs are zero rated under VATA 1994 Schedule 8 Group 12 rather than exempt, and zero rating carries full input VAT recovery.
What Changes Once You Are Registered?
You become partially exempt. Input VAT on costs used for taxable work is recoverable, input VAT on costs used for exempt care is not, and shared overheads are apportioned. The exempt slice is recoverable only if it stays inside the de minimis limits: on average no more than £625 a month or £7,500 a year, and no more than 50 percent of total input VAT. Cross either and you lose all of it.
The flat rate scheme is a poor fit. You can join with taxable turnover of £150,000 or less excluding VAT, and there is a 1 percent discount in the first year of registration, but the percentage table has no category for medical or health services, so a doctor lands in a general services heading. A practice spending under 2 percent of turnover on goods, or under £1,000 a year, is a limited cost business paying 16.5 percent, which is punishing for a business whose main cost is people. Model it before joining.
Registration status also cuts across how you are structured and taxed, which is covered in our guides to NHS and private income, the register test for therapists and VAT apportionment in an optical practice. Where income spans exempt care, reports and cosmetic work, a specialist reviews the split before the threshold is crossed rather than after.