GIM4270 - Taxation of general insurance: VAT

Supplies of, or in connection with insurance and financial services are exempt for VAT purposes. In practice, however, most insurance companies make both exempt and taxable (standard and zero-rated) supplies and will have partial exemption for VAT purposes. They will not therefore be able to recover all their input tax. A method of “attributing” inputs to outputs will be agreed with Customs, thus determining the amount of input tax recoverable. See BIM31500 for further guidance on VAT in general, and in particular BIM31540 on partial exemption.

For further details see the HMRC Guides and Business Briefs on VAT.