VATHLT6020 - Background: Scope and coverage

The dispensing of qualifying goods to a patient for his/her personal use by a registered pharmacist on the prescription (NHS or private) of a doctor or dentist is zero-rated. By concession, goods dispensed against a nurse’s prescription are also zero-rated. However, zero-rating does not apply to goods dispensed against prescriptions issued by other practitioners even though prescribing rights have been further extended to other health professions, including pharmacists. This is because of restrictions imposed by EU VAT law which, although permitting the UK to retain those zero-rates already in existence, does not allow us to introduce new ones.

The dispensing of qualifying goods by those general medical practitioners (GPs) required or authorised to provide NHS pharmacy services is also zero-rated. Private dispensing by GPs is however standard-rated.

When patients pay NHS prescription charges to the pharmacist or GP they are not paying for a supply of zero-rated drugs. They are actually paying a statutory fee, which is outside the scope of the tax; the doctor or pharmacist simply collects the fee on behalf of the NHS. In theory the pharmacist or doctor should pass this charge back to the NHS, but in practice it is offset against the payments due to the pharmacist from the NHS.