VAT – Psychologists’ services
Many of the services performed by psychologists have become exempt from VAT on 1 July 2009. This follows a change in the regulation of psychologists which now falls under the Health Professionals Council.
All services provided by psychologists which are deemed to be ‘medical care’ are now exempt from VAT. Medical care includes any service relating to the protection, maintenance or restoration of the health of the person concerned, including mental health. This also encompasses services including counselling, stress management courses and working with children suffering from emotional problems.
Certain services that may be provided by psychologists such as assessing a patient’s mental condition for legal reasons at the behest of a third party will still be subject to VAT. This is because the primary interest of the psychologist in this case is not the patient’s mental health but to provide service to a third party.
Also for psychologists who work solely in academic research and experimental psychology and do not see the general public, the VAT treatment of these services will remain as before.
Whilst this change will enable psychologists to stop charging VAT on their fees for ‘medical care’ it also means that they will cease to be able to recover VAT on their expenses. Some psychologists will move to ‘partly exempt’ status.