UK proposes VAT exemption repeal for locum-doctor supplies

The Bill would repeal a specific exemption

Section 54 of Bill 173 would repeal Item 5 of Group 7, Schedule 9 to the Value Added Tax Act 1994, which exempts “the provision of a deputy” for a registered medical practitioner. The Bill says the repeal would apply to supplies made on or after 1 May 2027. Parliament’s current tracker shows the Bill at first reading, so the repeal is proposed and not yet law.^[1][2][3]

The proposal follows a Tribunal decision

The change follows the First-tier Tribunal’s decision in Isle of Wight NHS Foundation Trust v HMRC [2025] UKFTT 1114 (TC), which found that Item 5 covered supplies of registered locum doctors as well as deputising services. HMRC says repeal would restore its earlier interpretation that a supply of staff is not itself a supply of medical care. Until the proposed change takes effect, registered locum-doctor supplies remain exempt under the decision and current guidance.^[1]

Staff supply and medical care remain distinct

A deputising service that itself delivers urgent primary care may remain exempt under Item 1 of Group 7. By contrast, a supplier that provides a locum doctor without taking responsibility for delivering the care or directing and controlling the doctor would fall outside that medical-care exemption if Item 5 is repealed. The contractual substance and responsibility for care therefore remain central.^[1]

Healthcare groups should prepare, not activate

NHS bodies, private healthcare providers, locum-supply businesses, employment businesses and umbrella companies should review contracts, pricing, invoicing and customers’ input-tax recovery for supplies from the intended date. Historic claims for overdeclared output tax remain relevant while Item 5 is in force, but associated input tax must be accounted for. No current return deadline or operative VAT treatment changes solely because the brief was published; the Bill’s passage and any amendments must be checked before implementation.^[1][2][3]