When did insurance premiums become subject to VAT?

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.

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

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".

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