Insurance charged to tenants

[Lawrence McAulay 01]

If a VAT-registered landlord recharges his tenants with insurance costs (in respect of an 'opted' property), is the supply exempt or standard rated?

The insurance is invoiced separately from the rent.

Many thanks in advance.

[vatexpert]

The VAT treatment depends on who is the insured person. If it is the landlord and he merely recharges his own premium to the tenant, this is treated as additional rent and is standard-rated, since the rent in this case is standard-rated. If the tenant is the insured person and the landlord pays the premium on his behalf and recharges the amount, this can be treated as a VAT-free disbursement, so long as the usual disbursement conditions are satisfied.

Joe Wilkins
www.vatexpert.net

[Lawrence McAulay 01]

Thank you Joe.