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When did insurance premiums become subject to VAT?

When did insurance premiums become subject to VAT?
David Ford

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By neileg
09th May 2005 16:57

Recharges?
If the insured party pays a premium to an insurer, this is not subject to VAT, just IPT.

If a third party has a liability to reimburse the insured, e.g. a tenant reimbursing a landlord under a lease, then the VAT status of the insurance element follows the treatment of the principal charge. Thus if the rent is subject to VAT, then so is the insurance.

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09th May 2005 18:31

Travel insurance?
Insurance Premium Tax is charged at 17.5% on travel insurance policies. So it may look like VAT, but isn't!

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By Anonymous
09th May 2005 19:55

Viking Direct charge VAT on their "insurance"
A client recently bought zero-rated goods (value approx £60) from the mail order firm Viking Direct.

The supply was "free carriage" but an "insurance" charge of £1.76 PLUS VAT (clearly marked as VAT) was shown.

In my opinion Viking Direct were incorrect in this instance.

However, if the main supply from Viking Direct were standard rated, then I can see a justification for the VAT charge.

If the "insurance" charge is NOT an exact cost recharge, but rather a figure they think they can get away with charging or they are not authorised insurers then the "insurance" charge should follow the VAT rate of the main supply - ie. ZR in the case of Coffee as in the example I saw recently.

I assume that Viking Direct hold a master insurance policy or self-insure, hence not possible to exactly recharge cost to customers, hence not either a supply of exempt insurance nor are they acting as an agent for the insurer. Consequently not VAT exempt. The agent principle I base my views on is the Plantiflor Ltd case (re: postage); the not-an-insurer principle I base my view on a TV rental company case of a few years ago - they failed to successfully establish that part of the rental was "insurance".


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By Anonymous
09th May 2005 15:36

Are you sure?
I didn't think they were - only IPT.... & I don't remember paying any on my car insurance renewal.....

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