VAT News

VAT - Expanded Zero Rating for Prescribed Drugs


This change, which is effective from the 9th October, will be relevant for pharmacies as well as dispensing doctors. It broadens the use of the zero rate to the supply of drugs through a patient group direction.

What is a patient group direction? its a written instruction that allows the healthcare professional, doctor , pharmacist etc to supply specified drugs and medicines to a pre-defined group of patients without needing a prescription.

The benefit of the Zero rate is that this is a Taxable supply for VAT purposes as opposed to being a VAT Exempt supply of healthcare. A body that makes Taxable supplies, and it is VAT registered, is able to recover the VAT it incurs on the associated costs. Making VAT Exempt supplies does not bring that ability to recover - unless the value of VAT incurred in the business overall falls under the de-minimis level for Partial Exemption.

A positive change therefore for the pharmacy and relevant healthcare sectors. For details on the guidance note published the 9th October 2023 you can access here

 Change to the VAT treatment of drugs and medicines supplied under patient group directions - GOV.UK (

For dedicated VAT support to ensure your accounting systems deal correctly with this change don't hesitate to get in touch with Centurion VAT - Xeinadin's Indirect Tax Team -



This note is for information only and specific VAT advice should always be sought.

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