Is VAT charged on interest received?

Is there VAT on interest received?

While all fee-based financial services are subject to VAT, interest charged is exempt. … In the case of an exempt supply made by a vendor, the vendor does not charge VAT on the supply and is not entitled to a deduction or credit for the VAT paid on goods and services supplied for the making of the exempt supply.

Do you pay VAT on bank interest?

Bank interest paid is exempt from VAT and therefore also not required to be included in the return.

Is bank interest exempt or outside the scope of VAT?

Bank interest is not to be included in the turnover used to calculate the VAT due by a business using the Flat Rate scheme. Interest is outside the scope of VAT. This change follows the decision in Fanfield Ltd Thexton Training Ltd v Revenue & Customs [2011] UKFTT 42 (TC) (11 January 2011).

What is VAT not charged on?

Zero-rated items

As well as the reduced rate, there are a number of products on which no VAT is charged. These include most food, children’s clothing, books and magazines, and goods sold in charity shops which have been donated by members of the public. There are several quirks in the VAT system.

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What is the VAT on loan received?

A: VAT is in terms of section 7(1) of the VAT Act is charge on the supply of goods and services. “Goods” are defined to exclude the supply of money. In our view a loan and the interest thereon constitutes a supply of money and no VAT is chargeable thereon.

Is VAT charged on late payment interest?

Interest is charged on the gross amount of the debt including VAT, but VAT is not charged on the interest. … In addition to the interest above, late payment legislation also allows for creditors to charge statutory fixed costs to any unpaid invoice.

Is interest paid exempt from VAT?

Section 12(a) of the Value-Added Tax Act, 1991 (the VAT Act) exempts the supply of any financial services from VAT. … The activity of granting interest-free credit is therefore not a financial service as contemplated in section 2(1)(f).

Is insurance VAT exempt?

Insurance supplied within the UK is exempt from VAT. … In normal circumstances, VAT cannot be recovered on goods and services bought in to make supplies that are exempt or would be exempt if they were supplied in the UK.

Is fuel VAT exempt or zero rated?

A fairly wide range of basic foodstuffs together with diesel, petrol and illuminating paraffin are zero-rated as distinct from exempt. This means that the customer pays no VAT, but the supplier can, if VAT registered, claim input VAT because they are making VATable supplies (albeit at a rate of zero).

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