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View the related Tax Guidance about VAT exemption

Liability ― fund management and other investment management

Liability ― fund management and other investment managementThis guidance note covers the liability of fund management services and some other investment management services.For an overview of liability more broadly, see the Liability ― overview guidance note.For in depth commentary on the legislation and case law on the liability of fund management see also De Voil Indirect Tax Service V4.136G.A review of the fund management exemption published in 2023 concluded that there was no need to amend the UK legislation to clarify its scope. Fund management ― the basicsThe management of certain funds is exempt from VAT. A range of categories of fund are covered by this exemption. Such funds are referred to collectively as special investment funds (or SIFs) although this is technically the terminology used in EU VAT legislation. SIFs include certain open-ended and closed-ended investment undertakings, umbrellas and sub-funds, as well as some pension schemes. The fund management exemption is limited to the management of SIFs. Consequently, the management of other investment funds will generally be standard-rated.Determining whether a given service (or package of services) represents the ‘management’ of a fund within the meaning envisaged by the VAT exemption often presents practical challenges. ‘Management’ can refer to the activities of administering a SIF as well as more typical investment management activities but only where ‘viewed broadly, they form a distinct whole and are specific to, and essential for, the management of those funds’. A single supply which is used for the management of multiple funds including both

VAT liability ― overview

VAT liability ― overviewThis guidance note provides an overview of the concept of VAT liability along with links to further practical guidance on the subject.In-depth commentary on the legislation and case law associated with VAT liability is covered in:•De Voil Indirect Tax Service V4.1 ― VAT exemption•De Voil Indirect Tax Service V4.2 ― the zero rate of VAT•De Voil Indirect Tax Service V4.4 ― the reduced rate of VATIntroduction to liabilitySupplies of goods and services which are made by taxable persons in the course of their UK business activities can be subject to one of four VAT liability treatments:•standard-rated•reduced-rated•zero-rated•exemptStandard, reduced and zero-rated supplies are often referred to collectively as ‘taxable supplies’. This distinguishes them from exempt supplies. The distinction between supplies that are taxable and supplies that are exempt is important because of its consequences for input tax recovery. VAT can generally be recovered on costs which are used to make taxable supplies. However, VAT cannot generally be recovered on costs which are used to make exempt supplies. This distinction is covered in greater detail in the Input tax ― overview and Partial exemption ― overview guidance notes. The reduced-rate, the zero-rate and exemption are sometimes referred to collectively as ‘VAT reliefs’. This is because VAT is either not chargeable on sales or is chargeable at a lower rate than the standard-rate. Despite being a ‘relief’, exemption will not necessarily be a more desirable treatment than the standard-rate because of its impact

Liability ― insurance ― agents, brokers and claims handling

Liability ― insurance ― agents, brokers and claims handlingThis guidance note examines the liability of the services of insurance agents, brokers and claims handlers.For an overview of the VAT liability of insurance more broadly, see the Liability ― insurance ― overview guidance note.For in-depth commentary on the legislation and case law, see De Voil Indirect Tax Service V4.123.Liability of services of agents, brokers and claims handlingA supply of insurance is a supply of services and is exempt from VAT, see the Liability ― insurance ― overview guidance note. The VAT exemption for insurance also applies to the services of an insurance agent or an insurance broker acting in an intermediary capacity in relation to insurance. Examples of services an insurance agent or an insurance broker may provide include:•introductory services when a person seeking insurance wants to be introduced to an insurer•claims handling services when an insurance policy holder has made a claimThe scope of the VAT exemption for insurance agents and insurance brokersThe VAT legislation provides exemption for insurance related intermediary services carried out by an insurance agent or an insurance broker. Whether or not the exemption applies is not affected by whether a contract is concluded. For example, if an insurance broker charges a client that is seeking insurance a fee for introducing them to an insurer, the fee is exempt from VAT regardless of whether the client decides to buy an insurance policy or not. What are insurance agents and insurance brokers?Insurance agents and insurance

Liability ― insurance ― overview

Liability ― insurance ― overviewA supply of insurance is a supply of services and is exempt from VAT. The VAT exemption for insurance also applies to the services of an insurance agent or an insurance broker acting in an intermediary capacity in relation to insurance. This guidance note provides an overview of the:•scope of the VAT exemption for insurance•entitlement of insurers, insurance agents, insurance brokers and insurance policy holders to recover VAT on costs•VAT treatment of insurance payments received by policy holdersIn-depth commentary on the insurance exemption can be found in De Voil Indirect Tax Service V4.121 to V4.124.Overview of the scope of the VAT exemption for insuranceThe VAT legislation provides for exemption to apply to:•insurance transactions and reinsurance transactions•the services of an insurance agent or an insurance broker acting in an intermediary capacity in relation to a contract of insurance or reinsurance regardless of whether the contract is concludedVATA 1994, Sch 9, Pt II, Group 2Whether the VAT exemption for insurance agents and insurance brokers applies does not depend on whether a contract for insurance is concluded. For example, if an insurance broker charges a client that is seeking insurance a fee for introducing them to an insurer, the fee is exempt from VAT regardless of whether the client decides to buy an insurance policy or not. For information about the VAT treatment of services supplied by insurance agents and insurance brokers, see the Liability ― insurance ― agents, brokers and claims handling

Education and vocational training ― private tuition

Education and vocational training ― private tuitionThis guidance note provides information about the VAT treatment of private tuition.For detailed commentary, see De Voil Indirect Tax Service V4.143.When is a supply of private tuition exempt from VAT?Exemption from VAT applies to the supply of private tuition, in a subject ordinarily taught in a school or university, by an individual teacher acting independently of an employer. Private tuition in a subject ordinarily taught in a school or university by an individual teacher acting independently of an employerTo determine whether a supply consists of private tuition in a subject ordinarily taught in a school or university by an individual teacher acting independently of an employer it is necessary to consider each of the following questions:•does the supply consist of tuition?•is the tuition in a subject ordinarily taught in a school or university?•is the tuition supplied by an individual teacher acting independently of an employer?VATA 1994, Sch 9, Pt II, Group 6, Item 2Does the supply consist of tuition?For a supply to consist of tuition it must involve the transfer of knowledge or skills rather than be purely recreational. Is the tuition in a subject ordinarily taught in a school or university?The question of whether a subject is ordinarily taught in a school or university is a question that may be asked by HMRC if the subject is not widely recognised as one that is ordinarily taught in schools, colleges or universities in the UK. The table below provides

Land and buildings ― income ― overview

Land and buildings ― income ― overviewThis guidance note provides an overview of the VAT treatment of generating income from land or buildings. It includes a table with an alphabetical summary of sources of income from land and buildings together with links to relevant guidance. See ‘Alphabetical summary of sources of income from land and buildings’ below.For detailed commentary on the VAT legislation and case law, see De Voil Indirect Tax Service V4.102.The VAT treatment of generating income from land and buildingsThe VAT legislation requires VAT to be charged on all supplies of goods and services made in the UK that are made in the course or furtherance of a business carried on by a taxable person except for supplies that are exempt from VAT. If VAT is chargeable, the rate may be the zero rate, the reduced rate or the standard rate, depending on the nature of the supply. For illustrative examples, see the table below under ‘Illustrative examples of income from dwellings and the VAT treatment that applies’. The VAT exemption for landA general VAT exemption for land is provided for by VATA 1994, Sch 9, Pt II, Group 1, but this legislation also includes a significant number of exceptions which are subject to VAT at the standard rate. In addition, VATA 1994, Sch 8, Pt II, Group 1, Item 2 provides for the zero rate of VAT to apply to supplies of animal feeding stuffs, which includes supplies of grazing rights. A practical difference between a

Weekly case highlights ― 12 May 2025

Weekly case highlights ― 12 May 2025Business taxR (oao Rettig Heating Group UK Ltd (in liquidation)) v HMRCThis is the latest in the never-ending saga of the compatibility of the UK’s historic treatment of foreign dividends with EU law but it will be of wider interest as it revolves around HMRC’s published practice in relation to the extension of time limits for claims, in Statement of Practice SP 5/01.In 2002 the company received dividends from an Irish subsidiary. It initially made its return on the basis that the dividends were taxable and it claimed to offset non-trading loan relationship deficits (NTLRD) against the income. It then amended its return, treating the dividends as not taxable, withdrawing the NTLRD claim and surrendering the NTLRD as group relief. The company later accepted that the dividends were in fact taxable, subject to a credit for foreign tax, which did not entirely cover the UK liability. In 2021 it therefore made a new claim to set part of the NTLRD off against the dividends (and reducing the group relief surrender accordingly). The time limits for such a claim having long-since passed, HMRC refused to apply its discretion to extend them, relying on SP 5/01. The company sought judicial review of HMRC’s decision.The Upper Tribunal dismissed the judicial review claim, holding that HMRC had not made any errors of law in interpreting the SP and that its decision was not irrational. The decision will be worth reading for anyone seeking to rely on SP

Exemption ― burial and cremation

Exemption ― burial and cremationThis guidance note provides an overview of the VAT treatment of services that are provided in connection with the burial or cremation of human remains.VAT treatmentThe following services are exempt from VAT:•the disposal of the remains of the dead•making arrangements connected with the disposal of the dead•services of one undertaker to another in connection with a specific funeral or cremationVATA 1994, s 31; VATA 1994, Sch 9, Pt II, Group 8, items 1 and 2; VBURC1000; De Voil Indirect Tax Service V4.151; HMRC Notice 701/32The VAT exemption only applies to the disposal of human remains. Disposal includes, burial, cremation or disposal at sea. This was confirmed in the tribunal case UFD Ltd. The burial or cremation of an animal is liable to VAT at the standard rate.The exemption under VATA 1994, Sch 9, Pt II, Group 1 (land) applies to the provision of grave space and the right to place an urn in a niche, etc.Funeral directors and undertakersIf the organisation provides a ‘funeral package’, the following goods / services will be exempt from VAT, providing the overall package includes disposing of the remains of the deceased person:•coffins•coffin cover / fittings•casket, scatter tube or urn•embalming•digging and grave preparation•transporting the deceased person to the burial or cremation ground•shroud / robe•using the chapel of rest•providing bearers•transportation of the mourners•tolling the bell and music at the service•live web streaming from the chapel of

Education and vocational training ― overview

Education and vocational training ― overviewThis guidance note provides an overview of the VAT treatment of education and vocational training. For detailed commentary, see De Voil Indirect Tax Service V4.141.What is education and vocational training?What is education?The concept of education is wide and includes courses and lessons of instruction in any subject, including physical education and instruction in sports. Education is not limited to education in a school, college or university. It may take place at a conference, online or by other means. What is vocational training?The legislation defines vocational training as training, re-training or the provision of work experience for any:•trade, profession or employment•voluntary work connected with education, health, safety, welfare or the carrying out of activities of a charitable natureVATA 1994, Sch 9, Pt II, Group 6, Note 3What is the VAT treatment of education and vocational training?The activity of providing education or vocational training in the UK is:•outside the scope of UK VAT if the supply does not take place in the UK or the activity is not carried on as a business activity•subject to the standard rate of VAT if the supply takes place in the UK and the activity is carried on as a business activity that does not qualify for exempt from VAT treatment•exempt from VAT if the supply takes place in the UK and the activity is carried on as a business activity that qualifies for exempt from VAT treatmentInformation about each of the above categories is

Liability ― welfare services

Liability ― welfare servicesThis guidance note examines the liability of supplies of welfare services.For an overview of the concept of VAT liability in generally, see the Liability ― overview guidance note.For in-depth commentary on the legislation and case law on supplies of welfare services, see De Voil Indirect Tax Service V4.146–V4.150.Liability of welfare services ― the basicsWelfare services can qualify for VAT exemption but only where they are supplied by certain kinds of organisations (charities, public bodies and state-regulated private providers) and the services are regarded as welfare within the VAT meaning of the term.There may also be circumstances when supplies within the welfare sphere qualify for the education exemption.As well as exemption, supplies of advice and information related to welfare services can be reduced-rated when provided by certain organisations.There will also be circumstances where the provision of welfare services is regarded as non-business and is therefore outside the scope of VAT. This can include (for example) advice and information provided free of charge and (by concession) welfare services supplied by charities at ‘significantly below cost’.Some supplies which could be regarded as welfare will not qualify for any VAT relief and will therefore fall to be standard-rated. An example would be welfare services supplied on a commercial basis by an unregulated for-profit organisation.Exemption ― welfare servicesServices can be exempt from VAT if they are both:•supplies of welfare services / goods with welfare services•made by a charity, state regulated private welfare institution (or agency) or a public bodyVATA