1. Overview

1.1 About this notice

This notice explains when you can zero-rate medicines for VAT, including:

• medicines supplied free of charge for NHS treatment
• investigational medicinal products and non-investigational medicinal products supplied for use in a clinical trial
• medicines supplied free of charge to continue treating a patient who received the same medicine during a clinical trial
• what counts as a medicinal product for the purposes of the zero rate
• imports of medicines for these uses
• certificates you need for qualifying supplies

This zero rate has effect from 23 June 2026. Deemed supplies before that date are subject to VAT at the standard rate of 20%.

1.2 Who should read this notice

You should read this notice if you:

• are a pharmaceutical company taking part in the Early Access to Medicines Scheme
• are a pharmaceutical company supplying medicines free of charge for NHS treatment, including through an early access or managed access programme
• are a pharmaceutical company supplying medicines free of charge to continue treating clinical trial participants
• import or distribute medicines supplied free of charge
• receive medicines supplied free of charge, whether or not they are for use in a clinical trial

1.3 The law covering this notice

This notice covers the following areas of the VAT Act 1994:

• Schedule 8, Group 12, Items 1ZA to 1ZC, covering zero rating for free-of-charge medicines
• section 62, covering incorrect certificates for zero rating

2. Medicines that qualify for zero rating

2.1 Medicines supplied free of charge for NHS use

A medicinal product (read paragraph 3.1) can be zero-rated when it is supplied free of charge, provided all other conditions are met, for:

• use in medical treatment that is commissioned or funded by the NHS

For this zero rate, ‘the NHS’ means:

• NHS England or a Special Health Authority in England
• a Health Authority, Special Health Authority or Local Health Board in Wales
• a Health Board or Special Health Board in Scotland
• the Common Services Agency for the Scottish Health Service, the Regional Business Services Organisation established under section 14 of the Health and Social Care (Reform) Act (Northern Ireland) 2009, or the Isle of Man Department of Health and Social Care
• a National Health Service trust established under the National Health Service Act 2006, the National Health Service (Wales) Act 2006 or the National Health Service (Scotland) Act 1978
• an NHS foundation trust
• an integrated care board established under section 14Z25 of the National Health Service Act 2006
• a Health and Social Care trust established under the Health and Personal Social Services (Northern Ireland) Order 1991
• Department of Health (Northern Ireland)

To qualify for the zero rate, the product must either:

• have a marketing authorisation, including a full marketing authorisation, conditional marketing authorisation or marketing authorisation in exceptional circumstances
• be supplied in accordance with regulation 167 of the Human Medicines Regulations 2012
• be supplied for use in the Early Access to Medicines Scheme

2.2 Medicines used in clinical trials

Investigational medicinal products and non-investigational medicinal products are zero-rated when supplied for use in a clinical trial authorised by the Medicines and Healthcare products Regulatory Agency (MHRA).

The clinical trial does not have to:

• be funded or supported by the NHS
• take place in an NHS hospital

2.3 Medicines for continued treatment after a clinical trial

A medicine can be zero-rated under item 1ZC(a) if both of the following apply:

• a patient took part in a clinical trial authorised by the MHRA
• the same product is supplied free of charge for the patient’s continued treatment after the trial

If the NHS provides the patient’s treatment, or if the patient’s treatment is commissioned or funded by the NHS, the supply may qualify for zero rating under either item 1ZB or item 1ZC(b).

If the NHS does not provide the patient’s treatment and it is not commissioned or funded by the NHS, the supply can only qualify under item 1ZC(a).

The zero rate can apply whether or not there was a commitment to provide the medicine after the clinical trial ended.

The medicine must be the same product that the patient received during the clinical trial.

Before 23 June 2026, supplies for use in clinical trials may be treated as samples, therefore no output tax is due. This has the same practical effect as a zero rate because you can recover all the input tax.

From 23 June 2026 up to and including 27 October 2026, you can continue to treat these as samples. In both cases, you can fully recover the input tax and no output tax is due.

From 28 October 2026, these should be treated as zero-rated. This means you will continue to:

• recover the same amount of input tax as you would if you treated the products as samples
• not account for output tax

2.4 When medicines supplied free of charge are standard rated

A medicine supplied free of charge outside of a clinical trial continues to be standard rated if both of the following apply:

• it is not supplied to an NHS body or someone providing treatment commissioned or funded by the NHS
• the patient did not previously receive the same medicine during a clinical trial

The only exception that applies is when you supply the medicine free of charge to an intermediary who then supplies it free of charge for a qualifying use.

2.5 Correcting VAT on supplies made between 23 June 2026 up to and including 27 October 2026

If you accounted for VAT on supplies that were standard rated between 23 June 2026 up to and including 27 October 2026 but now qualify for zero rating, you can correct the VAT you previously accounted for.

3. What counts as a medicinal product

3.1 Medicinal products definition

Medicinal products, for the purpose of item 1ZB and 1ZC, has the same definition as in The Human Medicines Regulations 2012 Regulation 2(1).

3.2 Investigational Medicinal Products and Non-Investigational medicinal products

For the purpose of item 1ZA, all investigational medicinal products and non-investigational medicinal products used in qualifying clinical trials can be zero-rated from 23 June 2026, provided all other conditions are met.

Before 23 June 2026, these supplies used in clinical trials may be treated as samples so no output tax is due.

3.3 Products that do not qualify for zero rating

A product cannot be zero-rated under items 1ZA to 1ZC if it is already exempt under Schedule 9, Group 7 of the VAT Act 1994.

For example, products for therapeutic purposes derived from human blood remain exempt from VAT even if they otherwise would meet the conditions for zero rating.

This applies to:

• investigational medicinal products and non-investigational medicinal products as defined in the Medicines for Human Use (Clinical Trials) Regulations 2004
• medicinal products as defined in regulation 2(1) of the Human Medicines Regulations 2012

3.4 Medicinal products after a clinical trial has concluded

After a trial has ended, a medicinal product used to treat a patient in the trial can continue to be zero-rated when supplied free of charge for the treatment of the same patient. This applies whether it was an investigational medicinal product or a non-investigational medicinal product, provided the same product continues to be supplied.

This will now be a medicinal product as defined in regulation 2(1) of the Human Medicines Regulations 2012.

4. Importing medicines

You can zero-rate the import of a medicinal product intended for a qualifying use if all the conditions for zero rating are met.

The qualifying uses are explained under paragraph:

• 2.1 — medicines supplied free of charge for NHS use
• 2.2 — medicines used in clinical trials
• 2.3 — medicines for continued treatment after a clinical trial

You must also have the appropriate certificate.

5. Certificates for qualifying supplies

5.1 When you need a certificate

You must keep a valid certificate in your business records when you make a zero-rated:

• supply of a medicinal product free of charge for use in a clinical trial
• authorised supply under item 1ZB or 1ZC
• import of either of these

The requirements are different depending on whether it is a clinical trial or an authorised supply under 1ZB or 1ZC.

The certificate confirms that the medicinal product (or, in the case of clinical trials, investigational medicinal product or non-investigational medicinal product) is being supplied for no consideration for a qualifying use.

A qualifying use is:

• use in a clinical trial (item 1ZA)
• medical treatment provided to a patient by the NHS free of charge (item 1ZA) or commissioned or funded by the NHS (item 1ZC(b))
• medical treatment for a patient who previously received the same product during a clinical trial (item 1ZC(a))

All references to ‘qualifying use’ in this VAT notice mean one of these uses.

Where the product is not supplied for use in a clinical trial, the certificate must also confirm that the supply is either:

• a medicinal product with a marketing authorisation
• a medicinal product supplied in accordance with Regulation 167 of the Human Medicines Regulations 2012
• for use in the Early Access to Medicines Scheme

5.2 A valid certificate does not automatically make a supply zero-rated

Having a valid certificate does not mean that you can automatically zero rate your supply or import. The certificate confirms that the medicinal product is intended to be used for a qualifying purpose. You must still meet all of the other conditions for zero rating.

5.3 Checking if a certificate is valid

You must take all reasonable steps to check that the certificate is valid. Keep evidence of any checks you make, including relevant correspondence with your customer.

This applies if the certificate is later found to have been issued incorrectly.

You can find the wording of this concession in VAT Notice 48: Extra Statutory Concessions, under ‘VAT: incorrect customer declaration’.

5.4 Who issues the certificate

The customer receiving the zero-rated medicinal product, investigational medicinal product, or non-investigational medicinal product issues the certificate. You can use the certificates provided in this notice or create your own certificate. If you create your own, it must contain the same information and declaration.

5.5 When to issue a certificate

If you are the customer, you must issue your certificate before your supplier makes their supply. HMRC will allow your supplier to adjust their VAT charge if you issue the certificate late provided that both of the following conditions are met:

• you can show that, when the supply was made, you had intended to use the medicine in the way stated on the certificate
• all the other conditions for zero rating are met

Your supplier cannot make an adjustment with HMRC if they’re restricted from doing so under the 4 year time limit. Read How to correct VAT errors and make adjustments or claims (VAT Notice 700/45).

5.6 Certificates for supplies through intermediaries

If you receive a medicine and supply it onwards to the person making the qualifying use, you must:

1. Get a certificate from your customer.

2. Give a copy of that certificate to your supplier.

The original supplier can then zero rate the supply if all the other conditions are met.

If you are importing the medicinal product, you can zero rate the import provided you have a certificate issued by the person making the qualifying use.

By entering the relevant zero-rated VAT codes in the Customs Declaration Service (CDS), you confirm that:

• the goods meet the conditions for the relief
• you hold a valid certificate

You may be asked to provide the certificate.

5.7 Choosing the correct certificate

There are 2 available certificates. Use the appropriate certificate to confirm that you’re either eligible to receive a:

• zero-rated supply in relation to a clinical trial
• zero-rated ‘authorised supply’ (as defined in Note 2F(c) of Schedule 8 Group 12)

You should issue whichever certificate is appropriate.

5.8 Penalties for issuing incorrect certificates

If you issue an incorrect certificate, you may have to pay a penalty equal to the amount of VAT not charged. A penalty is not VAT and, if you’re registered for VAT, you will not be able to recover it as input tax.

HMRC will not issue a penalty, or will withdraw it, if you can show that you had a reasonable excuse for issuing the incorrect certificate.

5.9 What you’re certifying when you issue a certificate

5.9.1 Qualifying use

If you get medicinal products free of charge, your declaration must confirm to your supplier that the supply is either:

• an investigational medicinal product or a non-investigational medicinal product for the purpose of use in a clinical trial
• an ‘authorised supply’ by the meaning of Note 2F(c) of Schedule 8 Group 12, for one of the qualifying uses set out in paragraph 5.1

5.9.2 The meaning of ‘use’

A medicinal product is ‘used’ when it has been consumed by or administered to the patient. The final use must be free of charge, whether to the patient or another party, for the zero rate to apply. This will normally be non-business use.

6. Certificates

The recipient of the supply must complete the certificates and give the certificate to their supplier so they can zero rate the VAT on their supplies for the qualifying use. There are 2 types of qualifying use:

• an ‘authorised supply’

6.1 Certificates for clinical trials

The requirements for this certificate have force of law under note 2F group 12 schedule 8 of the VAT Act 1994.

6.2 Certificates for authorised supplies

The requirements for this certificate have force of law under note 2F group 12 schedule 8 of the VAT Act 1994.

7. If the use of the medicine changes

If you received a medicine at the zero rate because you certified that it would be used solely for a qualifying use, you must use it for that purpose.

A medicinal product is ‘used’ when it is consumed by or administered to the patient.

If the medicine is used for any other purpose or if disposed of without being used for a qualifying use, you must tell your supplier that the certificate is no longer valid. Your supplier must account for output tax on the deemed supply.

8. Your rights and obligations

Read the HMRC Charter to find out what you can expect from us and what we expect from you.

9. Help us improve this notice

You’ll need to include the full title of this notice. Do not include any personal or financial information like your VAT number.

If you need general help with this notice or have another question contact the VAT: general enquiries helpline.

10. Putting things right

If you’re unhappy with HMRC’s service, contact the person or office you’ve been dealing with and they’ll try to put things right.

If you’re still unhappy, find out how to complain to HMRC.

11. How HMRC uses your information

Find out how HMRC uses the information we hold about you.