VAT due on Landlords’ Rent and Legal Protection Insurance?

by Readers Question

9:36 AM, 12th August 2014
About 4 years ago

VAT due on Landlords’ Rent and Legal Protection Insurance?

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VAT due on Landlords’ Rent and Legal Protection Insurance?

As I am frequently out of the country I have a single rental property under full management with a local agent. They previously arranged rent and legal protection cover for me through their block policy rather than as an individual. VAT due on Landlords' Rent and Legal Protection Insurance?

As it was getting increasingly expensive I have sourced an alternative cover which is considerably cheaper and apparently equally as good.

I have only been charged Insurance Premium Tax on this, not VAT.

My query is why would my agent have charged VAT on the cover he provided?

I have tried the HMRC website but it’s too complex for me to be certain of my facts.

Any (simple) explanation appreciated.

Thanks

Sue

 



Comments

Chris Sheldon

9:58 AM, 12th August 2014
About 4 years ago

Hi Sue,

There are two explanations:

1. The previous cover you had was a warranty based product and therefore there would be no IPT as it isn't an insurance product

2. It was an insurance based product and your agent was making a margin

Hope this helps

Chris

Michael Barnes

13:59 PM, 12th August 2014
About 4 years ago

This link http://www.ukbusinessforums.co.uk/threads/is-there-vat-on-insurance.79801/ suggests that your agent was correct.

In summary it says
"If agent arranges your insurance and passes cost on to you, then no VAT;
If agent arranges block insurance and passes your proportion of the cost on to you, then VAT is chargeable."

Note that this was the 2008 position, but I have no reason to think it has changed.

Sue Davies

9:57 AM, 13th August 2014
About 4 years ago

Thank you both for helping to clarify the situation. It's one of those questions that, with the benefit of hindsight, I now realise I should have asked the agents. Hopefully there won't be too many more.


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