Insurance
and Finance
Handling VAT in the insurance and finance sectors requires a clear understanding of how exempt services affect input tax recovery and compliance. At My Tax Consultants, we offer specialist VAT services for insurance and finance, helping organisations maintain accurate VAT treatment and improve overall cost control.
Companies in this sector often face unique VAT issues due to the exempt status of most financial and insurance services. This can lead to challenges in reclaiming input VAT, dealing with partial exemption, and interpreting regulations around cross-border transactions. Whether you’re a large institution or a small financial firm, getting VAT treatment right is essential to avoid errors, penalties, and revenue loss.
VAT Rules for the Insurance and Finance Sector
The insurance and finance VAT rules are outlined in the VAT Act 1994 and supporting HMRC guidance. Most services provided by insurance companies and financial institutions are exempt supplies, meaning they do not charge VAT on their output. However, this also limits the ability to reclaim input VAT on purchases used in connection with those services.
Our team provides practical support with:
- Insurance VAT treatment including intermediaries and brokers
- Finance VAT classification covering loans, investment advice, fund management, and more
- Reviewing contracts and transactions for VAT implications
- Analysing input VAT attribution and business overheads
- Drafting and submitting partial exemption special method applications
- Preparing for and responding to HMRC VAT inspections or reviews
We guide you through the rules applicable to exempt activities, mixed-use purchases, and VAT registration thresholds. Where applicable, we also explore the use of VAT grouping, cost-sharing arrangements, and reverse charge VAT finance issues.
Partial Exemption and Input Tax Recovery
One of the most frequent issues facing this sector is partial exemption. Since your organisation may make both taxable and exempt supplies, the input tax on purchases must be allocated accordingly. We carry out a full review of your business activities and help establish a method that meets HMRC’s approval while maximising input tax recovery.
Depending on your operations, we may recommend:
- Standard method: Based on the value of taxable vs exempt outputs
- Special method: Based on usage or sector-specific adjustments
- Sectorised method: Where different business divisions have distinct activities
We also perform annual adjustments, help prepare VAT return reconciliations, and document your calculations to satisfy HMRC requirements.
Cross-Border and Reverse Charge VAT Finance Considerations
For businesses receiving services from outside the UK, reverse charge VAT finance rules may apply. We assess your exposure, correct VAT treatment on imported services, and ensure you report accurately on your VAT return. This includes reviewing third-party fees, consultancy charges, IT services, and outsourced support that fall under reverse charge rules.
Compliance Support and HMRC Representation
Maintaining insurance and finance VAT compliance requires accurate record-keeping, regular internal reviews, and clear communication with HMRC. We offer support that includes:
- Preparing and filing accurate VAT returns
- Responding to HMRC enquiries or audits
- Reviewing VAT errors and advising on voluntary disclosures
- Advising on VAT registration obligations and group structures
Where disputes arise, we help resolve VAT issues with HMRC through written correspondence or on-site meetings. Our advice is based on up-to-date interpretations of VAT law as it applies specifically to financial sectors.
Who We Work With
Our VAT consultants work with a range of businesses across the insurance and finance industries, including:
- Insurance underwriters and brokers
- Pension scheme managers
- Investment advisors and IFAs
- Building societies, credit unions, and banks
- Financial leasing companies
- Mortgage intermediaries
- Private equity and venture capital firms
We offer tailored advice on how each activity should be treated for VAT purposes, and we support in documenting your tax position in a way that’s consistent, logical, and clear to HMRC.
Why Choose My Tax Consultants for VAT in Insurance and Finance?
At My Tax Consultants, we’ve built our reputation by supporting regulated businesses that deal with complex tax and compliance issues daily. With experience in VAT services for insurance and finance, our team focuses on delivering practical solutions that reduce financial exposure and maintain accurate VAT treatment.
We explain technical rules in a clear, straightforward way and help you apply them consistently across your operations.
Let’s Talk About Your VAT Obligations
VAT doesn’t have to be a grey area for your insurance or finance business. If you’re unsure how to apply VAT to certain transactions, want to improve input tax recovery, or need help with a partial exemption review, we’re here to assist.
Contact us today for a free consultation on VAT services for insurance and finance, and let’s make your VAT processes accurate, confident, and fully aligned with current tax law.
