Most dentists never think about VAT, and while the practice is purely clinical they are right not to. Add facial aesthetics, cosmetic whitening or a reception product range and the position changes in a specific month, on a rolling twelve-month test that most practices never run. This guide works the numbers: what is exempt, what is standard-rated at 20%, exactly when registration becomes compulsory, and what a mixed practice ends up paying.
Guide · Updated August 2026
Dental care and treatment supplied by someone on the dentists' register, or on the dental care professionals register established under section 45 of the Dentists Act 1984, is exempt from VAT. The exemption sits in Group 7 of Schedule 9 to the Value Added Tax Act 1994, and it applies whether the work is NHS or private. It covers examinations, fillings, crowns, endodontics, extractions, hygiene appointments and dental prostheses. Supplies of prostheses by dental technicians are exempt on the same footing, and HMRC accepts the exemption where a body corporate supplies services that are wholly performed or directly supervised by a registered dentist.
Exempt is not the same as zero-rated, and confusing the two is the single most expensive misunderstanding in dental VAT. On zero-rated income you charge nothing and reclaim everything. On exempt income you charge nothing and reclaim nothing. Every chair, autoclave, scanner, handpiece, composite kit and refurbishment invoice carries VAT at 20% that an ordinary dental practice simply absorbs. A £48,000 surgery fit-out costs a practice £57,600, and the £9,600 of VAT is not a timing difference to be recovered later — it is permanent cost, and it belongs in the appraisal before you sign the order. Our practice benchmarks guide works equipment and materials through as a percentage of turnover on that VAT-inclusive basis.
Sort the practice's income into three buckets once, properly, and most of the difficulty disappears. The first is exempt clinical income: NHS contract value, private treatment, hygiene and therapy, prostheses. For a great many practices that is all of it, the practice never registers, and VAT is genuinely a non-issue.
The second is standard-rated income at 20%. HMRC's test for the health exemption is that "the primary purpose of the services is the protection, maintenance or restoration of the health of the person concerned", and anything failing that test falls out of the exemption. In a dental setting the recurring items are:
The third bucket is the grey one, and it is smaller than dentists fear. HMRC's own dental manual says that "where cosmetic services are performed as part of a supply of dental treatment, then there is a single supply of exempt healthcare", and that cosmetic dentistry is standard-rated only where it is "performed outside of any healthcare". Composite bonding to restore a chipped incisor, orthodontics with an occlusal justification, whitening as part of a restorative plan — these sit on the exempt side because a clinical purpose exists and is recorded. Cosmetic dentistry conducted with no health element at all is the exception rather than the rule in practice.
A common worry is the licence or facilities fee a practice charges an associate, hygienist or therapist — the percentage retained for use of the surgery, equipment, materials, nurse and reception. It looks like a straightforward supply of services from the practice to the clinician, and if it were standard-rated it would be an enormous number: 20% on the practice's share of every associate's gross.
It is not. HMRC's guidance is that "the supplies of services (use of facilities, equipment and staff etc) and dental prostheses, by a dentist for the purpose of enabling an independent practitioner receiving the supplies to carry out dentistry are exempt". The supplying dentist has to be practising, and goods supplied for resale — the retail stock again — stay taxable. Our guide to engaging hygienists and therapists covers the employment-status side of the same arrangement, which carries far more risk than the VAT does.
Registration is compulsory once taxable turnover exceeds £90,000 in any rolling twelve months. Exempt dental income does not count towards it. A practice turning over £800,000, of which £780,000 is clinical, is nowhere near registration. A practice turning over £420,000 with a £96,000 aesthetics and retail arm is over the line and very often does not know it.
Two tests run in parallel and both bite:
The deregistration threshold is £88,000, deliberately set below the registration figure so that a business hovering around the line is not forced to register and deregister repeatedly. Both figures have applied since 1 April 2024.
A three-surgery mixed practice bills £680,000 of exempt clinical income. Alongside it, the principal runs facial aesthetics and cosmetic-only whitening worth £74,000, and reception sells £21,500 of brushes and whitening kits. Taxable turnover is therefore £95,500, and total income is £775,500.
The taxable slice passes £90,000 during the twelve months ended 31 October 2026. HMRC must be notified by 30 November 2026, and the practice is registered from 1 December 2026 — the first day of the second month after the breach.
From that date the £95,500 becomes VAT-inclusive unless the prices move. At 20%, the VAT element is £95,500 × 1/6 = £15,916.67, and the practice's income from that work falls to £79,583.33. Nothing about the clinical side changes; a sixth of the cosmetic income simply leaves.
Now the recovery side. The practice incurs £22,000 of input VAT across the year: £3,400 directly attributable to the taxable work (aesthetics consumables, whitening gel, retail stock), £14,600 directly attributable to exempt clinical work (materials, laboratory, surgery equipment), and £4,000 of residual overhead VAT that serves both — software, professional fees, utilities, marketing.
Under the standard method the recoverable proportion of that residual is the value of taxable supplies divided by total supplies, rounded up to the next whole number:
That is what registration costs if the price list stays where it is: roughly £12,000 a year straight off the practice's profit. The alternative is to add 20% to the cosmetic and retail prices, which holds income at £95,500 net, produces £19,100 of output tax, and leaves a VAT bill of £15,180 funded entirely by patients. The decision is a pricing decision, and it is far easier made before registration than three months after it.
Partial exemption has a relief built into it. If the input tax attributable to exempt supplies stays below £625 a month on average — £1,875 a quarter, £7,500 a year — and is also no more than half of total input tax, the business recovers all of it, exempt-related VAT included.
Run that against the practice above. Exempt input tax is £14,600 directly attributable plus the £3,480 residual that was not recovered, giving £18,080. That is two and a half times the £7,500 annual limit, and well over half of the £22,000 total. It fails both limbs.
There are two simplified de minimis tests as well, but a dental practice cannot use either: both require exempt supplies to be no more than 50% of all supplies, and in this practice exempt income is 87.7% of the total. The structural point is worth stating plainly, because it saves a lot of wasted hope — in a practice whose income is overwhelmingly exempt clinical work, de minimis will not apply. The recovery is the directly attributable taxable input tax plus a single-figure percentage of overheads, and that is the position to plan around.
Two mechanical points follow. The percentage above is provisional: an annual adjustment recalculates the year on full-year figures, re-applies the de minimis test to the annual totals, and corrects the difference. And registration brings the practice inside Making Tax Digital for VAT, with digital records and filing through compatible software — see our Making Tax Digital guide for how that fits with the rest of the practice's filing.
A registered, partly exempt practice that spends heavily on premises has historically been dragged into the Capital Goods Scheme, which locks a capital asset into a ten-year adjustment period and re-tests the recovery percentage every year of it. The trigger was capital expenditure of £250,000 or more, excluding VAT, on land, buildings or civil engineering work.
From 29 July 2026 that threshold rose to £600,000, and computers and computer equipment were removed from the scheme entirely. Assets already inside it on that date stay inside until their existing adjustment periods run out. For a partly exempt practice building or converting premises, a £400,000 project committed after 29 July 2026 now sits outside the scheme altogether — one fewer ten-year obligation, and a genuine reduction in the record-keeping a squat build carries. Our squat practice guide works through the wider set-up costs.
Most practices are not VAT-registered, so a sale raises no VAT question at all. Where the practice is registered because of an aesthetics or retail arm, the sale of goodwill, equipment and stock would ordinarily be a standard-rated supply — and 20% on a seven-figure consideration is not a detail to leave to completion.
The answer is the transfer of a going concern. Where the conditions are met there is no supply for VAT purposes and no VAT is chargeable. The conditions are that the assets are sold as part of the transfer, that the buyer intends to use them in carrying on the same kind of business, that the effect is to put the buyer in possession of a business capable of being operated as such, that the business is a going concern at the time of transfer, that the buyer is or becomes VAT-registered where the seller is registered, and that any part-business sold is capable of separate operation.
Two things follow. TOGC treatment is mandatory, not elective — where the conditions are met the seller must not charge VAT, and a seller who charges it anyway has handed the buyer an irrecoverable cost and a dispute. And because the treatment depends on what the buyer intends to do, it belongs in the heads of terms as an agreed position with warranties behind it. Our article on corporate heads of terms and the full guide to selling a practice deal with the rest of that document.
None of this is exotic, and none of it needs to be a surprise. What makes dental VAT expensive is that it arrives quietly, in a specific month, in a practice that had never had to think about it. Talk to us and we will run the three buckets against your last twelve months and tell you where the line sits.
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Not on clinical work. Dental care and treatment supplied by someone on the dentists' register or the dental care professionals register is exempt under Group 7 of Schedule 9 to the VAT Act 1994, whether NHS or private, so examinations, fillings, crowns, endodontics, extractions, hygiene appointments and prostheses carry no VAT. Most practices are not VAT-registered at all as a result. VAT enters only through the taxable fringe — facial aesthetics, purely cosmetic whitening, and products sold from reception — and only once that fringe exceeds £90,000 in a rolling twelve months. Exempt is not zero-rated, though: a practice charges no VAT and equally recovers none on its equipment, materials or refurbishment.
It depends on why it is being done, and the clinical record is what proves it. Whitening carried out purely for appearance, with no oral-health rationale, is standard-rated at 20%. Whitening forming part of a wider treatment programme is a single supply of exempt health care, because HMRC's own dental guidance treats cosmetic services performed as part of a supply of dental treatment as exempt, and standard-rates cosmetic work only where it is performed outside any health care. In practice most whitening in a general practice sits on the exempt side. Make that defensible by recording the assessment and the clinical reasoning at the time, not afterwards. Take-home top-up kits sold separately are standard-rated regardless.
When taxable turnover exceeds £90,000 in any rolling twelve-month period. Exempt clinical income is excluded from that figure entirely, so only aesthetics, cosmetic-only work, retail sales and similar standard-rated supplies count towards it. Under the historic test you notify HMRC within 30 days of the end of the month you went over, and registration takes effect from the first day of the second month after the breach. A separate forward-look test bites if you expect to exceed £90,000 in the next 30 days alone, with registration running from the date you realised. The deregistration threshold is £88,000. Both figures have applied since 1 April 2024.
Only to the extent the spending supports taxable work, which in a mostly clinical practice is very little. An unregistered practice recovers nothing, so a £48,000 fit-out costs £57,600 and the £9,600 is permanent cost. A registered mixed practice recovers input tax directly attributable to its taxable supplies in full, plus a proportion of general overhead VAT set by the standard method — taxable supplies divided by total supplies, rounded up. On a practice with £95,500 of taxable income against £775,500 total, that proportion is 13%, so £4,000 of overhead VAT yields £520. Budget capital spending on a VAT-inclusive basis.
Not where it is purely cosmetic. HMRC applies a primary purpose test — the exemption requires the protection, maintenance or restoration of the health of the person concerned — and states that services undertaken purely for cosmetic reasons are standard-rated, accepting cosmetic services as exempt only where they form an element of a health care treatment programme. Botulinum toxin and dermal fillers given for appearance therefore carry VAT at 20%, while the same drug used therapeutically, for bruxism or a diagnosed condition, follows the treatment. Aesthetics is the fastest route to the £90,000 threshold for a dental practice, so price it with 20% built in from the first appointment.
Usually not. If the practice is not VAT-registered, no VAT arises. If it is registered because of an aesthetics or retail arm, the sale of goodwill, equipment and stock would be standard-rated but for the transfer of a going concern rules, under which no supply takes place and no VAT is chargeable. The conditions are that the assets transfer, the buyer intends to carry on the same kind of business, the buyer is put in possession of an operable business, the business is a going concern at transfer, and the buyer is or becomes registered. TOGC is mandatory where it applies, so agree the treatment in the heads of terms.
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