What is different about tax for therapists
Psychologists, psychotherapists, counsellors, physiotherapists, massage therapists and arts therapists all run small practices in much the same way: clients pay per session, you hire a room or work from home, and you pay for supervision, training and insurance. Income Tax works the same for all of them. The big difference is VAT, which depends on whether your profession has a statutory register, and it can decide whether a busy practice has to add 20% to its fees.
Many therapists also combine employed and private work, for example an NHS physiotherapist or psychologist seeing private clients in the evenings. That is common and fine: your salary stays on PAYE and your private practice profit goes on a Self Assessment return.
VAT: which therapists are exempt
HMRC's VAT Notice 701/57 exempts medical care by health professionals who are enrolled on the appropriate statutory register. Two conditions must both be met: the service is within the profession you are registered for, and its main purpose is protecting, maintaining or restoring the health of the person concerned.
| Therapist | Statutory register | VAT on therapy sessions |
|---|---|---|
| Practitioner psychologists (clinical, counselling, health and other domains) | Health and Care Professions Council | Exempt, including counselling that relates to mental health |
| Arts therapists (art, music, drama) | Health and Care Professions Council | Exempt |
| Physiotherapists, occupational therapists, speech and language therapists, podiatrists, dietitians | Health and Care Professions Council | Exempt |
| Osteopaths and chiropractors | Their own statutory registers | Exempt |
| Counsellors and psychotherapists | None (membership bodies are not statutory registers) | Taxable once you are VAT registered |
| Hypnotherapists, acupuncturists, massage and sports massage therapists, reflexologists | None | Taxable once you are VAT registered |
HMRC says therapists such as acupuncturists, psychotherapists and hypnotherapists who do not have statutory registers cannot currently exempt their services. A psychotherapist who is also a registered practitioner psychologist or a medical practitioner can exempt qualifying services.
The details that catch people out
- Taxable income counts towards the threshold. You must register if taxable turnover goes over £90,000 in any rolling 12 months, within 30 days of the end of that month. Exempt income does not count.
- Primary purpose matters. A report written solely so a third party can make an insurance or legal decision is standard-rated, even when a registered professional writes it. Time management coaching is not medical care, whereas stress management courses by a practitioner psychologist can be.
- Direct supervision. Care by someone who is not registered can be exempt when it is directly supervised by a registered professional, but HMRC sets strict conditions, including a supervisor available for the whole time the service is provided.
For a counsellor with fees over £90,000, registering means charging 20% VAT, so a £75 session becomes £90 for the client, or your income drops if you absorb it. Plan well before you reach the threshold. Our VAT registration guide covers the process.
Sole trader or limited company
Most private practice therapists are sole traders. Here is a counsellor in England who takes £48,000 in fees in 2026/27, has £6,000 of expenses and no other income. The figures ignore pension contributions and student loans; Scotland has different Income Tax bands.
As a sole trader
- Profit: £48,000 less £6,000 is £42,000.
- Income Tax: £42,000 less the £12,570 Personal Allowance leaves £29,430, at 20% is £5,886.
- Class 4 National Insurance: £29,430 at 6% is £1,765.80.
- Total £7,651.80, leaving £34,348.20.
Through a limited company
- Salary £12,570, with employer National Insurance of 15% on the £7,570 above £5,000, which is £1,135.50. No Employment Allowance, as the director is the only employee.
- Company profit: £42,000 less £12,570 less £1,135.50 is £28,294.50. Corporation Tax at 19% is £5,375.96, leaving £22,918.54.
- Dividend tax: the first £500 is covered by the dividend allowance and £22,418.54 is taxed at 10.75%, which is £2,409.99.
- Total £8,921.45, leaving £33,078.55.
At this profit the company leaves you £1,269.65 worse off, before the cost of company accounts and filings. A company can make sense for larger practices that employ other therapists or keep profit in the business, but it is rarely a tax saving at typical private practice incomes. Model your own numbers with our self-employed tax calculator.
Expenses therapists can claim
| Expense | How it is treated |
|---|---|
| Room hire or clinic rent | Allowable |
| Clinical supervision | Allowable where it is for your practice |
| HCPC fees and memberships (BACP, UKCP, NCPS, BPS, CSP) | Allowable if related to your work. All are on HMRC's approved list, so employees can claim them too |
| Professional indemnity and public liability insurance | Allowable |
| CPD and training | Allowable if it improves skills you use, keeps you up to date, or develops new skills related to your practice. Training to start a new, unrelated business is not |
| Couches, equipment, assessment tools | Allowable expenses under the cash basis; capital allowances with traditional accounting |
| Directory listings, website, advertising | Allowable |
| Working from home | Flat rate of £10, £18 or £26 a month for 25 to 50, 51 to 100, or 101 or more hours, or the business share of actual costs |
| Travel to clients or between clinics | Allowable. Cars: 55p a mile for the first 10,000 business miles in 2026/27, then 25p. Travel between home and a regular place of work is not |
If you are employed as a physiotherapist or other therapist by the NHS, a private hospital, a local authority or an independent care provider, you can also claim a flat rate expense of £125 a year towards uniforms, work clothing and tools.
Small practices and side income
If you are just starting, the £1,000 trading allowance can help. If your gross trading income is £1,000 or less, you may not need to tell HMRC. Above that, you can deduct £1,000 instead of your actual expenses, but you cannot claim expenses as well. Once your costs are more than £1,000, claiming the real expenses usually works out better.
If you start private practice alongside a job, register for Self Assessment by 5 October after the end of the tax year you started. For a practice that began in 2025/26, that is 5 October 2026.
Licensing and Making Tax Digital
Special treatment licences. In London, providing massage and some other treatments commercially from premises generally needs a special treatment licence from the borough under the London Local Authorities Act 1991, renewed every year. There are exemptions, for example premises used by a professional registered under the Health Professions Order 2001 (such as a physiotherapist) solely for their profession, members of health practitioner bodies the council has approved, and treatments given only in the client's own home. Check with your borough.
Making Tax Digital. Many therapists will be brought in from April 2027. If your self-employment and property income before expenses was over £30,000 in 2025/26, you must use Making Tax Digital for Income Tax from 6 April 2027, keeping digital records and sending quarterly updates. The threshold is £50,000 for those already in from 6 April 2026 and falls to £20,000 from 6 April 2028. Our Making Tax Digital guide explains what changes.
Key dates for 2026/27
| Date | What is due |
|---|---|
| 31 July 2026 | Second payment on account for 2025/26 |
| 5 October 2026 | Register for Self Assessment if your practice started in 2025/26 |
| 31 October 2026 | Paper 2025/26 tax return |
| 31 January 2027 | 2025/26 online return, balancing payment and first payment on account for 2026/27 |
| 6 April 2027 | Making Tax Digital starts for qualifying income over £30,000 in 2025/26 |
| 31 July 2027 | Second payment on account for 2026/27 |
| 7 August 2027 | First quarterly update for anyone who joined Making Tax Digital in April 2027 |
How GoForma helps therapists
GoForma is a UK online accountancy practice based in London, working with clients across the UK by phone, video, email and WhatsApp. Our accountants are ACCA and AAT qualified, and FreeAgent accounting software (worth £360 a year) is included in every package, so session income and expenses are recorded as you go.
- Lite Sole Trader at £22 a month suits practices under £20,000 turnover where you keep your own books, with a basic Self Assessment return and two accountant discussions a year.
- Start Sole Trader at £44 a month, 50% off for the first 3 months, gives you a dedicated personal accountant, your Self Assessment return and WhatsApp support. Start Sole Trader + MTD at £68 adds quarterly Making Tax Digital submissions, and Start Sole Trader + VAT at £68 covers VAT.
- Prefer a one-off? A Self Assessment tax return is £198.
Prices exclude VAT and are rolling monthly. We are rated 4.9 on Google from 72 reviews and 4.8 on Trustpilot from 142 reviews. Compare our packages or book a free accounting consultation.