OBJECTIVE: The UK is a low endemic area for hepatitis B virus. Nevertheless, the National Health Service (NHS) burden of managing the disease and its long term sequelae is thought to be great. Understanding the extent of this cost is needed to estimate the budget impact of adopting therapies that avoid morbidity and mortality. The purpose of this study is to estimate the resources and costs associated with major health states of chronic hepatitis B (CHB). METHODS: Annual health care resource use was estimated by a panel of expert hepatologists for patients with chronic active hepatitis B (CAHB), compensated and decompensated cirrhosis (including ascites, bacterial peritonitis, variceal haemorrhage and hepatic encephalopathy), and hepatocellular carcinoma. Liver transplantation costs were obtained from published sources and unit costs from NHS-relevant sources. RESULTS: In the UK 39% of CHB patients receive antiviral therapy. The estimated annual cost is £2503 for CAHB and £2631 for compensated cirrhosis managed with antivirals. For patients without antivirals (61%), annual costs are £547 (CAHB) and £745 (compensated cirrhosis). Estimated annual cost for decompensated cirrhosis is £5842 using a distribution across the possible manifestations of the disease. Hepatocellular carcinoma is £6167 annually with less than 25% of patients receiving chemotherapy. Liver transplantation costs over £31,000 for the transplantation and £10,700 in the first year post transplant. CONCLUSIONS: The direct medical costs of CHB are substantial. Slowing or stopping disease progression could reduce the morbidity and mortality burden on patients and the cost burden for the NHS.