Exemption from VAT for dealing with securities and underwriting
Exemption from VAT for dealing with securities and underwriting

The following Tax guidance note provides comprehensive and up to date legal information covering:

  • Exemption from VAT for dealing with securities and underwriting
  • Why is the exemption for financial services important?
  • The financial services exemption from VAT
  • Dealing with securities exemption
  • Underwriting exemption

Why is the exemption for financial services important?

VAT is a key concern for businesses in the financial sector as the supply of certain types of financial services to customers belonging in the UK are exempt from UK VAT. This is important because:

  1. businesses will not charge VAT on services falling within the exemption, and

  2. such businesses will not be able to recover input VAT on supplies they receive in the course of making an onward exempt supply

The financial services exemption from VAT

The UK VAT exemption for financial services is based on the relevant provisions of Directive 2006/112/EC (the VAT Directive). These have been enacted into UK law by Schedule 9, Part II, group 5 to the Value Added Tax Act 1994 (VATA 1994), which sets out a number of items falling within the exemption.

This Practice Note focuses on the exemption for dealing with securities (VATA 1994, Sch 9, Part II, group 5, item 6) and the exemption for underwriting (VATA 1994, Sch 9, Part II, group 5, item 5A).

Dealing with securities exemption

The issue, transfer or receipt of, or any dealing with:

  1. any security, or

  2. secondary security

is exempt from VAT. This exemption is referred to as the 'dealing with securities exemption' throughout this Practice Note.

The provision of intermediary services in relation to