VAT zero rate on donated medicines
Published 28 October 2026
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This publication is available at https://www.gov.uk/government/publications/revenue-and-customs-brief-12-2026-vat-zero-rate-on-donated-medicines/vat-zero-rate-on-donated-medicines
Purpose of this brief
This brief explains the scope of the new zero rate for medicines supplied free of charge. This change applies from 23 June 2026.
Who should read this brief
You should read this brief if you donate medicines:
- to the NHS
- for use in clinical trials
- for the continued treatment of a patient who benefitted from participation in a clinical trial
Background
Pharmaceutical companies may provide medicines for the treatment of patients free of charge. These medicines may be donated during and after clinical trials, via patient access schemes operated by manufacturers, or via the UK Government’s “Early Access to Medicines Scheme”. However such donations may be deemed supplies for VAT purposes. This requires output VAT to be accounted for on the value of the medicines supplied.
On 23 June 2026, the government announced a new approach to VAT on donations of medicines. From this date, a VAT zero rate applies to medicines supplied free of charge for the treatment of NHS patients in qualifying circumstances. The zero rate also applies to supplies made during a clinical trial and for qualifying post trial-treatment of patients. This allows patients access to medicines not yet available, without those donated medicines incurring VAT.
Details
The VAT zero rate applies to supplies of medicines provided free of charge in the following circumstances:
- licensed medicines donated to the NHS for use in the treatment of an NHS patient
- lnlicensed medicines donated to the NHS for use in the treatment of an NHS patient
- all medicines donated through the Early Access to Medicines Scheme
- all medicines donated for use in clinical trials, and for continued post-trial treatment of patients who have benefitted from treatment in a clinical trial
- all medicines meeting the above criteria which are donated through an intermediary
‘Donated to the NHS’ includes donations to a party providing medical treatment commissioned or funded by the NHS. Pharmaceutical companies who donate medicines in the UK, or import such medicines, in the circumstances listed above will be required to obtain and retain certification from the recipient confirming the medicine will be used for a qualifying purpose.
The VAT zero rate for medicines provided free of charge will apply from 23 June 2026, subject to enactment. Suppliers should determine the time of supply using existing rules.
While the legislation awaits Royal Assent, HMRC will not require businesses to account for output VAT on supplies made on or after 23 June 2026 which satisfy the conditions of the zero rate.
HMRC will also process Error Correction Notices relating to output VAT previously accounted for on such supplies, subject to normal evidential requirements.
Medicines donated for use in clinical trials prior to 23 June 2026 may be treated as samples for VAT purposes.
Additional information
HMRC will publish guidance to explain the VAT zero rate on donated medicines.