Practical application of the exemption from VAT for intermediary financial services
Practical application of the exemption from VAT for intermediary financial services

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

  • Practical application of the exemption from VAT for intermediary financial services
  • Why is the exemption for financial services important?
  • The intermediary exemption for financial services
  • Practical application of the intermediary services exemption
  • Outsourcing
  • Loan arrangement and debt negotiation v debt collection
  • Corporate finance
  • Introductory services
  • Securities broking services
  • Soft commissions and commission sharing
  • more

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 intermediary exemption for financial services

It is common for supplies of financial services to involve other businesses acting as intermediaries between the parties seeking and providing financial services. Other businesses may also be involved in a financial services transaction, eg providing specialist advice or assisting with ensuring that the transaction takes place. Such services will be exempt from VAT where a supplier:

  1. acts in an intermediary capacity

  2. to provide intermediary services

  3. in relation to certain specified financial services transactions (whether or not a transaction is finally concluded)

This exemption is described as the 'intermediary services exemption' throughout this Practice Note.

This Practice Note considers some examples of the intermediaries exemption in practice. For more details on the specific definitions and requirements of this exemption, see Practice Note: Exemption from VAT for intermediary financial services.

Practical application of