VAT on physiotherapy, osteopathy and chiropractic treatment

You do not charge VAT on treatment given by a registered physiotherapist, podiatrist, osteopath or chiropractor, provided the treatment meets the conditions below. The exemption follows the practitioner's registration. It does not depend on how you describe your clinic.

The exemption decides whether you need to register for VAT, what you charge on products and reports, and how much VAT you can reclaim on your costs. It applies across the UK.

The exemption in outline

What counts as exempt treatment

For each service you sell, the practitioner must give treatment within their own profession and the main purpose must be to protect, maintain or restore health. HMRC names osteopathy and chiropractic treatment as examples. Rehabilitation whose main purpose is to improve physical and psychological health is also exempt.

A class or group session is exempt only if it is treatment within the practitioner's registered profession and its main purpose is health. Apply the same conditions to each class you run. If you are unsure, ask the VAT helpline before you set your prices.

Trading through a company

If a limited company supplies the treatment, HMRC says the company can supply exempt healthcare where its medical services are wholly performed by employees who are health professionals (VAT Notice 701/57, section 5.1). If your company will use self-employed practitioners to treat patients on its behalf, ask HMRC how the exemption applies before you set your prices.

Staff who are not on a register

Sports massage therapists, sports therapists and massage therapists have no statutory register. Their services are standard-rated unless a registered practitioner wholly performs them or directly supervises them. Sales of that kind count towards your VAT registration threshold.

If you employ unregistered staff, decide in advance who supervises them. The rule needs direct supervision, so read sections 2.5 and 5.3 of VAT Notice 701/57 before you treat an assistant's work as exempt. Section 5.3 sets out the conditions, including that a qualified supervisor is available for the whole time the service is provided. Unregistered staff also cannot use a protected title. For the register checks, see Check practitioners before they treat in your clinic.

Products, appliances and reports

Goods are exempt only where they are minor and inseparable from the treatment. Products you sell separately from the treatment are usually standard-rated. A supply of a disability appliance for a disabled person's own use can be zero-rated. If you are unsure which applies to a product, ask the VAT helpline.

A report written so that an insurer, solicitor or other third party can make a decision is standard-rated, even when a registered practitioner writes it. Standard-rated and zero-rated sales count towards your VAT threshold. Price products and reports as separate lines on your invoice so that each carries the right VAT treatment.

When you need to register for VAT

Exempt income does not count towards the registration threshold. A clinic that sells only exempt treatment does not have to register, however much it earns. You must register when your taxable sales go over the threshold. Those sales are standard-rated products, reports for third parties and services by unsupervised unregistered staff.

Once you are registered, you charge VAT on your taxable items only. Your treatment fees stay exempt. For the registration steps, see VAT registration.

VAT on your costs

Exempt supplies differ from zero-rated supplies. A business that makes zero-rated supplies can reclaim VAT on its costs. A clinic that makes only exempt supplies generally cannot, so VAT on equipment, software and supplies is a cost you cannot reclaim. Build it into your prices.

If you register because of taxable sales, your business is partly exempt. You can reclaim only the VAT that relates to your taxable supplies, plus a fair share of costs that serve both kinds of work. A de minimis limit can let you reclaim all of it. The rules and limits are in VAT you cannot reclaim. Ask HMRC or an accountant to confirm your method before your first VAT return.

Rent from practitioners

If you let a room to a self-employed practitioner, the rent is a separate supply from their treatment. The exemption covers treatment and not the room. Ask HMRC how VAT applies to the rent before you agree terms.

What to read next

VAT is one decision in setting up a clinic. The full path is in Start a physiotherapy, osteopathy or chiropractic clinic. If you also need to decide between trading as a sole trader or a company, see Sole trader or limited company.