The £90,000 registration threshold
GOV.UK says businesses have to register for VAT if their VAT taxable turnover is more than £90,000. That is about your sales, not your profit.
Many solo therapists never get near that figure. Until you do, you do not add VAT to your session fees.
It helps to keep a simple running total of your income, so you can see how close you are well before it matters.
What the health exemption covers
HMRC has a notice for health professionals (VAT Notice 701/57). It says the exemption is for people enrolled or registered on the appropriate statutory register, such as doctors, dentists, nurses, pharmacists and osteopaths.
There are two tests. The service must fall within the profession you are registered in, and its main purpose must be the protection, maintenance or restoration of health.
Where hypnotherapists and other therapists fit
The same notice says practitioners without a statutory register, and it names acupuncturists, psychotherapists and hypnotherapists, cannot currently exempt their services.
In plain terms, the exemption is not the reason a hypnotherapist does not charge VAT. The reason is being under the threshold. If your work is different, for example you work under the supervision of a registered health professional, the notice sets out its own rules.
If you get close to the threshold
- Check your figures with HMRC or an accountant before you pass it.
- Ask which of your income counts as taxable turnover, including things like courses and products.
- Work out how VAT would affect your prices, because your clients are usually private individuals who cannot reclaim it.
This page is general information, and your own situation may differ.
Questions to put to an accountant
A short conversation with an accountant can save worry later. Useful questions to ask:
- How close am I to the registration threshold, given my income so far this year?
- Does anything I sell, such as courses, recordings or guides, count towards that figure differently from sessions?
- If I did register, how would I handle VAT on prices my private clients pay?
- What records should I keep now so that registering would be simple?
You can also contact HMRC directly. Bring your income figures and a clear list of the services you offer, and ask them to confirm how each one is dealt with. Write down the answers and the date, so you have a record of what you were told.
More questions
Do I need to charge VAT if I earn under £90,000?
No. GOV.UK says businesses have to register once their VAT taxable turnover is more than £90,000. Below that, you do not have to register or charge VAT.
Are counselling and hypnotherapy VAT exempt?
HMRC links the exemption to being on a statutory register for the services you give. Hypnotherapists and psychotherapists are named as having no such register, so check with HMRC or an accountant about your own case.
Does VAT apply to courses and recordings I sell?
It may count towards your taxable turnover. Ask HMRC or an accountant how your own mix of services and products is handled.
