Crossing the threshold
As Benjamin Franklin famously wrote in 1789, ‘In this world, nothing can be said to be certain, except death and taxes.’¹ Death may be universal, but taxes are anything but. They reflect political choices about what society values, who should contribute, and which services deserve support rather than penalty.
This leaves counsellors and psychotherapists in a paradoxical position. Governments repeatedly commit to improving access to mental health support and recognise the vital role therapists play. Yet while psychiatrists, psychologists and art therapists providing comparable healthcare services are exempt from value added tax (VAT), counsellors and psychotherapists are not.
The reason is straightforward: VAT exemption depends on statutory regulation, and counsellors and psychotherapists are not state regulated. Once a practitioner’s taxable turnover exceeds £90,000, they must register for VAT.
For many therapists in private practice, that threshold may seem remote. Yet a therapist working five days a week, seeing seven clients a day for 42 weeks a year at £75 per session, would generate a gross income of £110,250. Even after business expenses, net income could remain above the VAT threshold. While many practitioners choose to see fewer clients, the BACP Ethical Framework sets no maximum number of client hours, making this a realistic scenario for some.
Crossing the threshold creates a difficult choice. Therapists can increase fees by 20% to cover VAT, turning a £75 session into £90 and potentially pricing therapy beyond some clients' reach, or absorb the cost themselves, reducing income by £15 per session. Either way, the current system discourages therapists from expanding their practices and risks limiting access to therapy.
BACP and other professional bodies have long argued that this is inequitable. Counsellors and psychotherapists often train to standards comparable with psychologists and art therapists yet receive different tax treatment simply because they are not statutorily regulated.
Under the Labour government, tax reform has returned to the political agenda. Government could remove this anomaly through changes to VAT legislation. However, if exemption continues to depend on statutory regulation, the profession may also need to reconsider its longstanding commitment to voluntary regulation.
There are legitimate concerns about statutory regulation. Critics argue it could medicalise emotional distress, reduce diversity and increase bureaucracy. Yet the potential benefits deserve serious consideration. Statutory regulation could strengthen public confidence, reassure clients that therapists meet recognised standards and give the profession the parity that protected titles confer.
Whatever the route to reform, the current system is difficult to defend. It creates inequity between comparable professions, risks reducing access to therapy, and discourages practitioners from developing sustainable practices. If we are serious about improving access to mental health support, this longstanding anomaly deserves urgent attention.
Reference
1. Franklin B. https://tinyurl.com/36wj9rfe (accessed 31 July 2026).
This is an edited extract from an editorial first published in Private Practice, September 2026, published by BACP©