Exemption ― insurance ― brokers and agents

Produced by Tolley
Exemption ― insurance ― brokers and agents

The following Value Added Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Exemption ― insurance ― brokers and agents
  • Who is a broker or agent?
  • Intermediary services
  • Introductory services
  • Claims handling
  • Aspiro SA
  • UK treatment
  • Collecting premiums
  • Expert services
  • Telephone helpline and phone sales
  • More...

VATA 1994, Sch 9, Group 2, item 4 exempts the provision by an insurance broker or insurance agent of any of the services of an insurance intermediary in a case in which those services:

  1. are related (whether or not a contract of insurance or reinsurance is finally concluded) to an insurance transaction or a reinsurance transaction

  2. are provided by that broker or agent in the course of his acting in an intermediary capacity

VATA 1994, Sch 9, Group 2, item 4, Note 1; De Voil Indirect Tax Service V4.123; 2006/112/EC, Art 135(1)(a); 2008/08/EC; VATINS2000, VATINS5000; VAT (Input tax) (Specified Supplies) Order 1999, SI 1999/3121; HMRC Notice 701/36

This guidance note provides an overview of the VAT rules relating to supplies made by insurance intermediaries and agents. This note should be read in conjunction with the Insurance overview and Insurance ― specific transactions guidance notes.

Who is a broker or agent?

An insurance agent is not defined in either the UK or EU legislation.

HMRC gives the following definition in its guidance:

“For the purposes of the VAT exemption HMRC recognise, that an insurance agent might be anyone who provides insurance related services in an intermediary capacity. An agent could be a tied agent who sells insurance as his main business or, for example, a typical high street retailer or a car dealer arranging insurance to cover the goods they sell. Whereas an insurance broker usually acts for the insured, an agent may act for the insurer, the insured or both. The definition of an insurance agent, therefore, is fairly wide.”

In HMRC Notice 701/36, para 9.1.1, HMRC provides the following definition:

  1. insurance broker ― normally acts for the insured person or person seeking insurance in negotiating a contract of insurance on their behalf

  2. insurance agent ― this person is normally tied to a particular insurance provider and arrange and administer their policies

If an insurance broker or agent makes the following supplies, they will be exempt from VAT:

  1. the business supplies

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