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​Introduction

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​In basic terminology, Insurance is the guarantee to compensate an individual or company for a specified loss.  To ensure losses are covered, individuals or companies will pay a premium to an insurance

company on a monthly or annual basis.

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Generally, something is insurance for VAT purposes if it’s an activity that requires the provider to be authorised as an insurer under the provisions of the Financial Services and Markets Act 2000 (FSMA).

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VAT Liability of Insurance

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The supply of Insurance services to customers in the UK is Exempt from VAT. 

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Supplies of Insurance made to non UK customers is outside the scope of UK VAT.   However VAT can be recovered in relation to these supplies under the Specified Supplies Order.

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Note: for insurance intermediary services, the right to recover input VAT has been restricted by HMRC to circumstances where the final consumer (insured party) of such services belongs outside the UK following the FTT decision in Hastings Insurance Services Ltd (2025) UKFTT 275 (TC). 

 

See link to HMRC policy. VAT deduction on insurance intermediary services ...

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Note: there maybe situations where a number of services including insurance are supplied together as a bundle and as such there may be mixed supplies for VAT purposes.

 

 

Please click on the below HMRC insurance VAT guide for more details on how to determine the correct VAT treatment.  

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Insurance (VAT Notice 701/36)

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-Contains public sector information licensed under the Open Government Licence v3.0.

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