FinanceValue Added Tax (VAT) relief (exemption) and medical research

(Summaries from HMRC VAT Notice 701/6 – Charity funded equipment for medical, veterinary etc uses for departments involved in public/charity funded medical research)

To decide whether VAT relief may be claimed you will first need to know:

  • Whether the University is purchasing the goods/services for its own use i.e. are not being purchased for re-sale, and if so
  • What will the University actually be using them for?
  • Is the medical research funded by eligible funds (i.e. grant, departmental, or charity funds)?
  • Are these items eligible for VAT relief?

Note: In FMS, if your sub project is fully funded by a commercial body (Tax System FR for VAT-fully-recoverable), please do not claim VAT relief.

There are three ‘medical’ zero rate reliefs:

  • The purchase of medical, scientific, computer, video, sterilising, laboratory and refrigeration equipment predominantly for use in medical or veterinary research, training, diagnosis, or treatment
  • The purchase of medicinal products and substances wholly for use in medical/veterinary research, treatment or care
  • The purchase of custom made computer programmes/licences to use software solely for the purposes of medical research, diagnosis or treatment

The University is able to benefit from VAT zero rating relief when it purchases (or hires) “relevant goods” which are predominantly for use in medical/veterinary research, training, diagnosis or treatment. Relevant goods constitute items of medical, scientific, computer, video, sterilising, laboratory, or refrigeration equipment. HMRC defines ‘equipment’ as articles designed for a specific purpose. They are usually durable, although certain disposable items such as syringes that are designed to be used once only, may still be equipment. The VAT relief applies irrespective of whether equipment is bought outright, leased or rented.

This is equipment that has features or characteristics that identify it as having been designed for a medical (including dental), purpose or function, such as the diagnosis or treatment of patients.

This covers a wide range of goods, from simple items like bandages and tongue depressors to complex machinery such as X-ray machines and scanners.

General use items used to equip a medical facility such as a television purchased for use in a hospital ward are not medical equipment.

This is equipment designed to perform a scientific function. This includes precision measuring equipment and analytical equipment such as thermometers, weighing machines and spectrometers.

Equipment that is not designed to perform a scientific function, but merely works on a scientific principle, is not scientific equipment.

This includes computer hardware such as servers, screens, keyboards, and disks. It also includes ‘normalised’ i.e. off the shelf computer programmes. Custom made programmes and licences to use programmes are services and not equipment, see page 10. Machinery or other equipment that is either operated by computer or has computerised components is not computer equipment.

Covers video recording and playback equipment.

This includes autoclaves and other specialised equipment using steam or other high temperature processes. Microwave ovens and other cooking appliances do not qualify even when used to sterilise. Sterilising fluid is not equipment and does not qualify.

This is equipment designed for use in a laboratory such as test tubes and other laboratory glassware, Bunsen burners, fume cupboards, microtomes, cryostats, laboratory benches and specialised sinks and catchpots.

Note: Ordinary cupboards, lockers, seats and other furniture are excluded together with other general purpose items.

This includes all cooling and freezing equipment whether or not of an industrial type, special design for specific purpose or the common domestic ‘fridge’.

Resuscitation training models (resuscitation dummies) can be zero- rated if they include a head and torso designed only for use during first aid training in cardiopulmonary resuscitation and/or defibrillation techniques.

VAT relief is available for parts and accessories to relevant goods. Parts are integral components without which the equipment is incomplete. Accessories mean optional extras that are not necessary for the equipment to operate in its normal course, but are used to:

  • improve the operation of the equipment; or 
  • enable the equipment to be used, or used to better affect, in particular circumstances

This would cover, for example, a printer for use with a computer, a specifically designed camera for use with a microscope, a rack for holding test tubes.

Items that are not parts or accessories are:

  • items that have independent uses such as television sets 
  • accessories to accessories such as a filter for a camera which is itself an accessory to a microscope 
  • consumables such as ink cartridges, specialised paper and generic bulk substances such as liquids, powders, sheets, pellets, and granules

VAT relief may be obtained for the repair or maintenance of eligible goods which are owned or possessed by the University. This includes work done under a maintenance contract or as a ‘one-off’ repair; goods supplied in connection with such services are also included in the relief.

If the normal selling price of goods which are eligible for relief contains an amount for installation, fixing or connection to mains services and/or testing equipment on site, zero rating will apply to the whole selling price i.e. including that element which relates to installation or testing. However, where building works, such as the removal of walls or the reinforcing of floors are necessary in order to install large items of equipment, these works will be standard-rated, even when carried out by the supplier of the eligible equipment.

  • Anesthetic apparatus
  • Aprons, lead lined for x-ray protection
  • Autoclaves
  • Bandages
  • Barometers
  • Bedpans
  • Bedpan washers, with sterilising steam cycle
  • Beds, highly specialised e.g. net suspension or medical water beds
  • Bunsen burners
  • Cameras, video
  • Catheters
  • Centrifuges
  • Clamps - medical
  • Computer disks and tapes
  • Computer keyboards
  • Computer mouse
  • Computer printers (not eligible when used in general administration)
  • Computer screens
  • Computer screen filters
  • Computer servers
  • Deep freezers
  • Dental chairs
  • Dental drills
  • Dental mirrors
  • Dental spittoons
  • Drip poles
  • Endoscopes
  • Electro-cardiographs
  • Eye test charts
  • Examination couches, adjustable
  • First aid kits - supplied as pre-packaged units
  • Forceps
  • Fume cupboards
  • Gloves, surgical
  • Heart pacemakers
  • Hypodermic needles
  • Ice making machines
  • Identification bracelets for patients
  • Kidney bowls
  • Laboratory benches
  • Laboratory glassware
  • Mattresses, specially designed for the relief/prevention of pressure sores
  • Medicine measures, graduated
  • Microscopes
  • Operating lights
  • Patient trolleys and stretchers
  • Physiotherapy equipment, specialised - other than gymnasium equipment
  • Pillows, orthopedic, specially designed and used for neck or spinal injuries
  • Pipettes
  • Radiography equipment
  • Renal dialysis units
  • Resuscitation equipment
  • Resuscitation dummies
  • Scalpels
  • Sphygmomanometers
  • Splints
  • Stethoscopes
  • Surgical gloves
  • Surgical gowns
  • Surgical masks
  • Suture needles
  • Swabs
  • Test tubes
  • Thermometers, clinical
  • Thermometers, other
  • Tongue depressors
  • Video cameras
  • Video tapes
  • Video players
  • Video monitors
  • Weighing machines
  • Wound dressings
  • X-ray films/plates
  • X-ray machines - medical
  • X-ray machines - other
  • X-ray viewers

  • Air conditioners (non-specialised)
  • Alarms, security or smoke
  • Alarm bracelets
  • Aprons, other
  • Bedpan washers, other
  • Blankets
  • Cameras, still
  • Catering equipment
  • Cleaning equipment
  • Closed circuit television systems
  • Computer stationery
  • Cotton wool
  • Curtains
  • Disinfectants
  • Drugs trolleys
  • Gloves, other
  • Gymnasium equipment
  • Hearing aids
  • Laboratory animals
  • Lockers
  • Nurse call systems
  • Occupational therapy materials
  • Overbed tables
  • Overhead projecting units
  • Pagers
  • Pillows, other
  • Screens
  • Stationery
  • Sterilising solutions
  • Tape recorders
  • Television sets
  • Towels
  • Uniforms
  • Waste disposal bags, boxes, jars and sacks
  • Waste disposal machinery

Purchase of medicinal products and substances used wholly in medical/veterinary research, treatment or care

The University is able to purchase medicinal products and substances which it will use wholly for medical/veterinary research, treatment or care.

A ‘medicinal product’ is a substance presented as a medicine, or an ingredient for a medicine, capable of being administered to people or animals for a medicinal purpose. The zero rate covers medicinal products purchased for the purpose of testing the effectiveness of those products.

Note: A ‘medicinal purpose’ means:

  • treating or preventing disease 
  • diagnosing disease or ascertaining the existence or degree of a physiological condition 
  • contraception
  • inducing anaesthesia
  • otherwise preventing or interfering with the normal operation of a physiological function, whether permanently or temporarily, and whether by terminating, reducing or postponing, or increasing or accelerating the operation of that function, or in any other way

The University can claim VAT relief when purchasing substances directly used for testing, or for mixing with other substances, in the course of medical or veterinary research.

Note: A ‘substance’ can be natural or artificial and can be in solid or liquid form or in the form of a gas or vapour. If the substance is purchased in the form of gas, the zero-rating will also apply to the cylinder rental.

Purchase of custom made computer programmes/licences to use software solely for the purposes of medical research, diagnosis or treatment

The University is able to claim VAT zero rating on the purchase of custom made computer programmes and licences to use software which are solely for the purposes of medical research, diagnosis or treatment.