Practical application of the exemption from VAT for dealing with securities

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

  • Practical application of the exemption from VAT for dealing with securities
  • Why is the exemption for financial services important?
  • Dealing with securities exemption
  • Practical application of the exemption from VAT for dealing with securities
  • Financial derivatives
  • Stock lending
  • Trading on the London Stock Exchange (LSE)
  • Trading on London International Financial Futures and Options Exchange (LIFFE)
  • Electronic data services
  • Transferable cards that entitle the holder to discounts

Practical application of the exemption from VAT for dealing with securities

IP COMPLETION DAY: 11pm (GMT) on 31 December 2020 marks the end of the Brexit transition/implementation period entered into following the UK’s withdrawal from the EU. At this point in time (referred to in UK law as ‘IP completion day’), key transitional arrangements come to an end and significant changes begin to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: What does IP completion day mean for Tax?

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

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.

This Practice Note considers some examples of the dealing with securities exemption in practice. For more details on the specific

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