Insurance Payments and VAT
Posted on 7 February 2014 by education.finance
There have been a few instances where VAT has been reclaimed incorrectly on insurance. For VAT purposes insurance is classed as Exempt (code 8) and therefore there is no VAT charged. However, most insurance payments also include 6% Insurance Premium Tax (IPT). IPT is nothing to do with VAT and cannot be reclaimed from HMRC – it’s simply a tax on insurance that everyone has to pay.
Please make sure that when processing insurance invoices the insurance plus the IPT is paid using VAT code 8 and no VAT is recovered. Please note: while there is no VAT on insurance, VAT may be due on warranties or guarantees.
If you receive an invoice for insurance which clearly states that VAT has been charged at 20%, please contact the Vat Team or phone 01392 382410/382842 before processing the payment
Like this post: