Change to the VAT treatment of drugs and medicines supplied under patient group directions
Published 9 October 2023
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This publication is available at https://www.gov.uk/government/publications/revenue-and-customs-brief-7-2023-change-to-the-vat-treatment-of-drugs-and-medicines-supplied-under-patient-group-directions/change-to-the-vat-treatment-of-drugs-and-medicines-supplied-under-patient-group-directions
Purpose of this brief
The government announced at Spring Budget 2023 that it would be extending the use of the zero rate of VAT on prescriptions to drugs and medicines supplied through patient group directions.
This brief explains:
- the change to the VAT treatment of drugs and medicines supplied through a patient group direction
- where businesses can find more information
The change has no impact on drugs or medicines that already qualify for VAT zero-rating under existing provisions.
Who needs to read this
Pharmacies, pharmacists, dispensing doctors and tax agents advising on VAT.
Background and Coverage
The scope of the VAT zero rate for supplies of drugs and medicines dispensed to individuals for their personal use is being temporarily extended to include the supply of drugs and medicines which are dispensed in accordance with a patient group direction issued under the Human Medicines Regulation 2012.
A patient group direction is a written instruction that allows healthcare professionals to supply and administer specified drugs and medicines to a pre-defined group of patients without a prescription.
A temporary VAT zero rate will apply to drugs and medicines supplied under such patient group directions and so bring them into line with drugs and medicines dispensed on a prescription of a registered health professional. The zero rate will apply from 9 October 2023 until 31 March 2027.
The new zero rate applies to supplies made by a registered pharmacist (including a pharmacy technician in Great Britain (England, Scotland and Wales)) or by a General Practitioner practice where a pharmacy is too remote and dispensing is allowed under Note 2D of Group 12 of Schedule 8 to the VAT Act 1994.
The new zero rate does not apply to vaccines and medicines administered by a health professional, for example by injection. These supplies are exempt where the service is provided by a pharmacist or other medical professional listed in paragraph 2.1 of Notice 701/57. This is because such services are regarded as medical treatment and not for personal use. The new zero rate only applies where the goods are administered by the patient.
Effective Date
The change will take effect from 9 October 2023 until 31 March 2027 and will apply to drugs and medicines supplied pursuant to a patient group direction during that period.
More Information
Find out more information on the VAT liability of Health professionals and pharmaceutical products (VAT Notice 701/57).
This notice will be updated to clarify the position.