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Treasury extends two new VAT exemptions to pharmacies

The Treasury has announced two VAT changes relating to community pharmacy in a move welcomed by sector leaders.

A VAT exemption on healthcare will be extended from May 1 to include medical services supervised by pharmacists, Chancellor Jeremy Hunt announced in his spring budget yesterday (March 15).

This will allow contractors to review the VAT status of any locally commissioned services they provide where provision occurs under the “direct supervision” of a pharmacist.

The government will also extend the zero rate to medicines supplied under a patient group direction (PGD) in autumn this year, it said.

In his budget speech, Mr Hunt said the government would "shortly" publish its long-term workforce plan for the NHS.

The plan, which will outline a strategy to improve the healthcare staffing crisis, was originally promised in last year's autumn statement.


“Best use of skill mix”


Pharmaceutical Services Negotiating Committee (PSNC) chief executive Janet Morrison said the service-related VAT exemption marked a “critical step” towards allowing pharmacies to make the “best use of skill mix that they have”.

Although it was “depressingly predictable” for community pharmacy to be “overlooked” in the budget statement, Ms Morrison said there had never been a “bigger missed opportunity than today”.

Read more: Halt PQS until pharmacy funded fairly, PSNC tells government

“It’s particularly insulting that some organisations are being given help with energy bills, but not our network of pharmacies,” she commented.

The government must choose to “back” community pharmacy and “reap the benefits” or else “oversee the collapse of community pharmacy”, she warned.

It comes as PSNC earlier this week (March 13) revealed it had told the government to halt the upcoming Pharmacy Quality Scheme (PQS) until it funds the sector fairly.


Equal footing


Meanwhile, Company Chemists’ Association (CCA) chief executive Malcolm Harrison said he was “delighted” to see that the new VAT measures will  “place pharmacists on an equal footing with GPs and other prescribers”.

“These measures will boost capacity in pharmacies and, crucially, pave the way for the future commissioning of clinical services in community pharmacy," he added.

The National Pharmacy Association (NPA) also welcomed the announcement, although it warned that “fundamental concerns remain”.

The NPA has said that it has “long argued for these changes, which the association believes will support the development of pharmacy services and facilitate skill mix”.

Read more: Petition to 'save our pharmacies' tops 1.8k signatures in one day

NPA chief executive, Mark Lyonette, said the measures “don’t touch the sides as far as the massive hole in pharmacy funding is concerned”, although he conceded that the government had “listened to the sector on these specific VAT matters”.

But he added that “although this is a positive signal, it is pennies rather than pounds and another opportunity to fundamentally address the funding crisis in community pharmacy has been missed in this latest budget”.

It comes as pharmacy bodies have joined forces to work on a campaign to "save" England's pharmacies.

Last week, the campaign's petition demanding fair pharmacy funding gained over 1,800 signatures just a day after it was launched.

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