How we are funded
Published 2 November 2026
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1. Where our funding comes from
1.1 Funding from Defra
We receive government funding through Defra. This funding supports activities that are not covered by fees and charges, including work undertaken in the wider public interest, enforcement, and research and development. Resource and capital budgets are agreed through government spending and parliamentary processes.
1.2 Fees and charges for services
Businesses that we regulate pay fees that are set out in legislation for defined services. This includes assessing applications for veterinary medicine authorisations, authorising and inspecting manufacturers, wholesalers and retailers, providing scientific advice, and delivering parts of the statutory residues surveillance programme.
1.3 Other income
We also receive smaller amounts from sources such as funding from other government departments, international work and other recoveries.
2. Charging principles
Fees are intended to recover the costs of providing chargeable regulatory services, rather than to generate a profit. They are set within the relevant statutory framework and in line with HM Treasury’s Managing Public Money principles. The amounts and charging rules are set in legislation rather than determined informally by VMD, giving the fee-funded element of the model a statutory basis. The legal framework for these fees is set out in the Veterinary Medicines Regulations 2013, regulation 16 and Schedule 7, as amended. We charge fees for our regulatory services so that the businesses that use them help pay for the cost of delivering those services. This reduces the amount that would otherwise need to be funded by taxpayers.
We aim to ensure that businesses only pay for the services that they use. We also regularly review charges to make sure they are fair, proportionate and reflect the cost of providing our services.
Both our government funded and fee-funded activities are governed through normal Defra and VMD accountability arrangements.
3. Direct fees and graded annual fees
Our charging arrangements include both direct fees and annual fees. Direct fees are charged for identifiable regulatory activities carried out for an individual applicant or authorisation holder, such as assessing an application, processing a variation or undertaking an inspection. The fee is linked to the type and complexity of the service provided. Graded annual fees payable by Marketing Authorisation Holders support the ongoing regulatory oversight of authorised veterinary medicines. The annual fee payable is capped at 0.67% of annual animal pharmaceutical sales. The percentage is calculated annually to be set at a level of cost recovery for our regulatory services.
4. Summary
Our funding model means that service users pay for the services they receive, while government funding pays for work that benefits the wider public.
This supports our independence as a regulator acting in the public interest. Our decisions are based on rigorous scientific risk assessments, legal requirements and the need to protect animal, public health, and the environment. Commercial interests do not influence our decisions.
Our accounts are annually independently audited by the National Audit Office and laid before Parliament. You can find these on Veterinary Medicines Directorate Annual reports and accounts - GOV.UK.