Financial Services UK VAT Liability Matrix

Financial Services are a major element of the United Kingdom's economic output and include services such as Banking, Insurance, Pension Fund Management, Fund Management, Factoring, Hedge Fund Management, Stockbroking, Alternative Financing, Fin Tech, Accountancy, Taxation, Financial Advisory, Management Consultancy and many other areas.

As such this creates a lot of complexity around how VAT should be applied to these services when companies supply such services to UK or overseas customers and where the VAT treatment is driven by HMRC rules around the place of supply and customer type.

Outlined in the table below are a list of the most common types of Financial Services provided by UK enterprises to UK and overseas customers who can be either private individuals, businesses or Government and Municipal institutions.

The respective VAT treatment (Standard Rated (20%), Zero Rated, Exempt or Outside the Scope) for each product or service is categorised below based on whether the service is supplied to a UK or overseas customer.  

Key Point to Note:  Many financial, banking and insurance type services provided in the UK are exempt from VAT when supplied in the UK and as such any Input VAT incurred on costs in providing these services is generally irrecoverable from HMRC. However, under the Specified Supplies Order (SSO) 1999, where such services are supplied to non UK customers, the Input VAT incurred on costs by businesses providing these is recoverable.  For more information on which services fall under the SSO, please see our Financial Services VAT Page.