VAT and private practice: the £90,000 threshold, and why counselling still isn't exempt

If your income has been creeping towards six figures, or you're about to take on your first associate, you may have wondered whether counselling works like other health services: exempt from VAT once you register, the way a physiotherapist's or a doctor's fees can be. It doesn't, and that catches a genuine number of therapists out.

Practitioner psychologists, who are regulated by the Health and Care Professions Council (HCPC), can supply clinical work VAT-free. Counsellors and psychotherapists registered with BACP, UKCP or NCPS cannot, because those are voluntary accredited registers rather than statutory ones, and the government confirmed again in January 2026 that it has no plans to change that. If you're anywhere near £90,000 of turnover, it's worth understanding this well before your accountant has to explain it to you after the fact.

This is not tax advice. Whether VAT applies to you, when, and what you should do about it depends on your turnover, how your practice is structured and exactly what you supply, and those are questions for your accountant. What follows is a plain description of the rule as it currently stands, so you know it exists and can ask the right questions in good time.

What the medical exemption actually requires

VAT law exempts "medical care" supplied by specific registered health professionals: doctors, dentists, opticians, pharmacists, nurses and midwives, osteopaths, chiropractors, and the group registered under the Health Professions Order 2001, which includes arts therapists, occupational therapists, paramedics, physiotherapists, speech and language therapists and practitioner psychologists, among others. HMRC sets this out in VAT Notice 701/57.

The thread running through that list is statutory regulation. Every profession on it has a legal register, overseen by a regulator with statutory powers, and being struck off means you can't practise under that title at all. Practitioner psychologists have been on that list, and therefore VAT-exempt for their medical-care work, since 1 July 2009.

Why BACP, UKCP and NCPS registration doesn't qualify

Counselling and psychotherapy have no equivalent statutory register. BACP, UKCP and NCPS are accredited voluntary registers, overseen by the Professional Standards Authority, and that accreditation is a genuine quality mark. It is not the same thing as statutory regulation, and HMRC's exemption turns specifically on the latter.

The practical result: a psychotherapist and a practitioner psychologist can do very similar one-to-one talking work, and only one of them can supply it VAT-free. That distinction seems arbitrary if you haven't met it before, but it's been the government's consistent position, not an oversight waiting to be fixed.

The £90,000 threshold, and what crossing it means

If your services aren't exempt, ordinary VAT registration rules apply. You must register once your taxable turnover in any rolling 12-month period (not a tax year, any 12 months) goes over £90,000, or if you expect to cross that figure in the next 30 days on its own. The deregistration threshold, if your turnover later drops back, sits slightly lower at £88,000.

Once registered, standard-rated supplies carry VAT at 20%. For a private practice, that generally means one of two choices: raise your fees by roughly a fifth, or absorb the cost and take a corresponding cut to your margin. Private, self-funding clients can't reclaim VAT the way a VAT-registered business client could, so from their side it simply looks like a price rise.

For most solo practitioners this is distant, but it stops being distant faster than people expect once a practice adds a room, an associate whose fees route through the same business, or a training and supervision offering alongside client work. Turnover, not profit, is what's being measured, and it accumulates faster than take-home pay does.

The narrow exceptions

There are a few edge cases in the exemption rules: services carried out under the direct supervision of a statutorily regulated professional, or supplied inside a registered hospital or care setting providing medical treatment, can sometimes fall inside the exemption even when the person doing the work wouldn't otherwise qualify. In practice, these situations are uncommon for a self-employed private practitioner working under their own name. If you think one might apply to you, for example because you work partly within an NHS or clinical setting, that's a specific question worth taking to your accountant rather than assuming either way.

The campaign to change this, and where it stands

BACP, UKCP and the British Psychoanalytic Council, working together as the Collaboration for Counselling and Psychotherapy Professions, have been pressing government to extend the medical exemption to their registers. The case, made most recently in a report from the Partnership of Counselling and Psychotherapy Bodies, is that requiring statutory regulation as the dividing line makes little sense when voluntary, PSA-accredited registers already set comparable standards.

The Treasury's most recent public answer on this, a written parliamentary response on 7 January 2026, restated the existing position: there are no current plans to introduce a VAT exemption for counsellors and psychotherapists without statutory registration. It's worth watching if the professional bodies keep raising it, but there's nothing to plan around yet beyond the rule as it stands today.

What to check before you're near the threshold

A few things are worth doing while £90,000 is still comfortably ahead of you rather than a live decision:

• Track your rolling turnover, not just your annual total. A strong few months can bring the 12-month figure closer than an annual review would show.
• Decide in advance how you'd handle a fee change if registration became necessary: raising prices, absorbing the cost, or some mix, and how you'd explain that to existing clients if it came to it.
• Know what counts. If associates in a group practice invoice clients directly under their own names, their turnover is generally theirs, not yours; if you invoice on their behalf, it may not be. This is exactly the kind of structural detail that changes the answer, and it's worth confirming with your accountant rather than assuming.
• Ask your accountant to flag it, rather than discovering the threshold has passed at year-end. Being pre-registered with a plan is a completely different experience from a surprise letter.

What Faresay tracks, and what it doesn't

Faresay records every session and payment as it happens, so you can see your income building up in real time rather than reconstructing it from memory or a bank statement, and export it as a CSV whenever you want a clean view of your rolling turnover. What it doesn't do is calculate VAT, register you, or file anything with HMRC. That side of it belongs with your accountant or dedicated bookkeeping software, and we'd rather say that plainly than let a therapist assume otherwise.

If you're already tracking your income carefully elsewhere, none of this changes. If you're not, having an accurate, exportable record is the thing that makes a VAT conversation with your accountant quick rather than archaeological.

This article describes VAT rules as they stood in September 2026 and is provided for general information. It is not tax or accounting advice, does not take account of your circumstances, and thresholds, rates and the exemption itself may change. Check the current position on GOV.UK and take advice from your accountant before making decisions.

Faresay is practice management software for UK therapists, not an accounting or filing service. See how it works.