The exemption excludes cosmetic procedures and hair transplants
The definition of health care in the exemption notification expressly does not include hair transplant or cosmetic or plastic surgery, except when undertaken to restore or reconstruct anatomy or functions of the body affected by congenital defects, developmental abnormalities, injury or trauma. A skin clinic is the place where this line is drawn most often. Treating acne, infections, psoriasis, vitiligo or skin cancer is exempt. Botox for wrinkles, fillers, laser hair removal and hair transplants for pattern baldness are cosmetic and taxable. Record the purpose for every procedure.
Taxable cosmetic procedures need a tax invoice
Cosmetic procedures carried out by a doctor are not covered by the 5% beauty services entry for salons, which is for group 99972. They fall under medical services and, as there is no concessional entry for them, are commonly billed at the general 18% rate. A clinic doing such work must register once aggregate turnover, which includes exempt treatment fees, crosses the threshold, and must issue tax invoices for cosmetic lines. Check the rate with your adviser and apply it consistently.
Reconstructive work after injury stays exempt
Scar revision after a burn or accident, treatment of congenital marks that affect function, or laser treatment of scars from trauma falls in the exception that keeps reconstructive work within health care. The clinical notes should record the cause, such as burn injury on a specific date, so the exemption can be defended. Without the cause recorded, the same procedure looks cosmetic.
Medicated products versus cosmetics
Prescribed creams, lotions and shampoos containing active drugs are medicaments under 3004, taxed at 5% from 22 September 2025. Sunscreens, moisturisers and serums sold without being medicines are cosmetic preparations under chapter 33, which may still carry 18% unless the product is one of the items specifically cut. Use the classification on the manufacturer's invoice; do not reclassify cosmetics as medicines to lower the rate.
Credit apportionment for mixed clinics
Lasers and equipment are used for both treatment and cosmetic work. Credit on shared equipment and rent is allowed only in proportion to taxable turnover, under Rules 42 and 43. Keep a monthly split of treatment and cosmetic revenue to compute the reversal. Equipment used only for cosmetic procedures qualifies for full credit.
Packages that mix treatment and cosmetic sessions
Clinics often sell an 'acne and glow' package that begins with medical treatment for active acne and moves into cosmetic peels once the acne settles. Split such packages into a treatment part and a cosmetic part at the time of sale, with separate prices, rather than one bundled fee. If the package is sold as one price, the tax department may treat the whole package as a mixed supply taxed at the higher rate. Clear splits protect the exempt part and give the patient an honest bill.