In April 2006, two major changes occurred in dispensing practices' finances. First, the vast majority of dispensing practices now have to register for VAT. Secondly, the way in which dispensing income is calculated and paid has changed.
Before April 2006 practices paid VAT on drug purchases, and were compensated by receiving a subsidy equivalent to the VAT they had paid. On 1st April 2006 this subsidy ceased, so dispensing practices are now obliged to register for VAT in order to recover the VAT they pay.