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HMRC internal manual

VAT Health

Introduction: NHS healthcare

The provision of healthcare by the NHS is a statutory function: it is thus non-business rather than exempt. NHS hospitals are funded centrally by Government for their provision of healthcare as well as for the VAT they incur. They are registered for VAT and as well as recovering input tax in relation to those taxable supplies they make in the course of business, they are permitted under a special provision under section 41 of the VAT Act 1994 to recover the tax incurred on certain services in relation to their non-business statutory provision.