Last updated: 14 October 2026
How do opticians and hearing aid sellers account for VAT?
Opticians and hearing aid dispensers make a mix of supplies. The professional dispensing service, such as fitting and checking glasses or hearing aids, is exempt from VAT when it is supplied by, or under the direct supervision of, a registered health professional. The goods themselves, such as frames, lenses and hearing aids, are standard-rated at 20%. When glasses or hearing aids are sold as a package, the price must be split between the exempt service and the taxable goods using a fair and reasonable method.
What’s exempt and what’s taxable
| Supply | VAT treatment |
| Eye tests by a registered optometrist | Exempt |
| Dispensing spectacles or contact lenses by a registered optician | Exempt |
| Frames, lenses and contact lenses (the goods) | Standard-rated |
| Hearing tests and fitting by an HCPC-registered dispenser | Exempt |
| Hearing aids (the goods) | Standard-rated |
| Batteries, cleaning products and accessories | Standard-rated |
| Sunglasses and non-prescription goods | Standard-rated |
Hearing aids are specifically excluded from the zero rate for goods for disabled people, so they’re not zero-rated.
Apportioning a package price
HMRC expects the split to reflect the real value of each part. Acceptable methods are usually based on:
- the cost of the goods plus a mark-up, with the rest treated as the exempt service
- the time spent on dispensing, valued at a professional rate
- separate prices for goods and services shown on the invoice
HMRC changed its approach in 2013 to stop businesses using fixed percentages that didn’t reflect actual values. If you use a method agreed with HMRC years ago, check it still gives a fair result.
Partial exemption
Because opticians and dispensers make exempt supplies, they’re partly exempt. VAT on costs relating to exempt supplies can’t normally be reclaimed, unless it falls within the de minimis limits. You’ll need a partial exemption method, usually the standard method based on taxable and total turnover.
Example
Clearview Opticians sells a pair of glasses for £300. The frames and lenses cost £90 to buy. Using a cost-plus method with a 50% mark-up, £135 is treated as goods (VAT-inclusive at 20%, so £22.50 VAT) and £165 is the exempt dispensing service.
Records
Keep a written record of your apportionment method, the calculations behind it and any agreement with HMRC.
Errors
If your method under-declared VAT, you may be able to correct errors up to £10,000, or 1% of turnover up to £50,000, on your next return. Larger errors need disclosure to HMRC.
Common mistakes
- Treating the whole price of glasses or hearing aids as exempt
- Using a fixed split that no longer matches what you charge or what goods cost
- Applying the exemption where the dispensing is not done or supervised by a registered professional
- Reclaiming all input VAT without a partial exemption calculation
- Zero-rating hearing aids as goods for disabled people
A regular review of your method, at least once a year, helps show HMRC that the split is fair.
Frequently asked questions
Are NHS sight test fees exempt?
Yes.
Do contact lens subscriptions need splitting?
Yes, between lenses and any professional care.
Are online sales of glasses exempt?
Only the part dispensed by a registered professional.
Can I reclaim VAT on equipment?
Only the share relating to taxable supplies.
Related: VAT for the self-employed, the VAT surcharge review and VAT registration at £92,000 turnover.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with VAT for healthcare businesses. See our VAT accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
