VAT due on Landlords’ Rent and Legal Protection Insurance?

by Readers Question

9:36 AM, 12th August 2014, 12 years ago 3

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Landlord News Landlords Questions

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.

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

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Comments

Chris Sheldon

Member Since June 2013 - Comments: 72 - Articles: 27

9:58 AM, 12th August 2014, About 12 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

2 Report Comment Reply
Michael Barnes

Member Since July 2013 - Comments: 1434

1:59 PM, 12th August 2014, About 12 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.

1 Report Comment Reply
Sue Davies

Comments: 1

9:57 AM, 13th August 2014, About 12 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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