Question to the HM Treasury:

To ask the Chancellor of the Exchequer, what steps her Department is taking to review the VAT treatment of medicines supplied free of charge to patients under early access schemes.

Under UK VAT law, some transactions where no money changes hands are treated as if a supply has been made – these are called deemed supplies. This is to keep the system fair if a business has reclaimed VAT on costs. This is a core and longstanding feature of UK VAT rules.

Whether VAT applies to medicines or treatments provided for free depends on the precise facts of each case.

I have heard concerns from firms and others that these rules have impacted the sector’s ability to donate medicines for free. On 23^rd June I announced that the Government would bring forward a new approach to address this issue, which will consist of either changes to the VAT rules or a reimbursement scheme.

The new approach will be effective for all donations made on or after 23^rd June.

HM Treasury officials are working with colleagues in DHSC to develop options at pace and engaging closely with industry partners to ensure a solution is fit for purpose.