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HMRC internal manual

VAT Insurance

What is insurance for the purposes of the exemption?: the regulation of insurance: general

Insurance regulatory legislation requires insurance companies to limit their activities to insurance and operations arising directly from it (that is, ‘insurance business’). Not everything that is regulated as insurance business is an insurance transaction for VAT purposes (see VATINS2400).

As a general rule we accept that something is an insurance transaction if it is an activity that requires the provider to be authorised as an insurer. Obviously, supplies by block policyholders (see VATINS2300) are an exception to this. Other exceptions are covered in VAT Notice 701/36: Insurance.

The regulation of insurance companies was previously provided for in law by the Insurance Companies Act (ICA) 1982. On 1 December 2001 the Financial Services and Markets Act (FSMA) 2000 replaced the ICA and became the regulatory legislation for all financial services in the UK. The body responsible for carrying out the regulation is the Financial Conduct Authority (FCA).