VAT on insurance premium

[speedking31]

I had a courtesy car from a dealer while mine was being serviced.

On the bill was an item; "Insurance for courtesy car".

I presume that they aren't charging me for the depreciation, small amount of fuel, etc. but do charge for the insurance cover, even though I have DOC on my policy.

Against that item they have charged 20% VAT. As IPT is only 12%, is this an error? It may be that their item could have a more appropriate name.

The sums are minor, but it's another indication of lack of attention to detail when attending the dealers. (Like ticking suroof on the service checklist when I don't have one and not changing the brand of tyres that they've checked from the OEM ones.)

Can someone in the know confirm whether 20% VAT should be charged on courtesy car provision?

[Magic919]

They are not charging you an insurance premium, so it’ll attract standard rate VAT.

[Sebring440]

speedking31 said:

even though I have DOC on my policy.

DOC does not cover you for damage to the courtesy car. Hence the courtesy car insurance policy.

[ralphrj]

Magic919 said:

They are not charging you an insurance premium, so it ll attract standard rate VAT.

This.

They aren't regulated to sell insurance so can't charge IPT. What they have called 'insurance premium' is just an add-on fee and should be subject to VAT.

[speedking31]

Thanks for the replies.
It's the text on the bill itemised as "Loan car insurance" that needs changing.

[Sebring440]

speedking31 said:

On the bill was an item; "Insurance for courtesy car".

speedking31 said:

It's the text on the bill itemised as "Loan car insurance" that needs changing.

Which is it?

Doesn't matter, you've been charged the VAT correctly.

[Mr Tidy]

speedking31 said:

Thanks for the replies.
It's the text on the bill itemised as "Loan car insurance" that needs changing.

Probably, my Indy just puts "Loan Car" on his invoices.

[Sheepshanks]

It's VAT on the service of supplying you insurance.

Same as lease car drivers pay VAT on the extra cost of VED when it goes up.


Check your insurance doesn't cover courtesy cars fully comp - mine with LV does and daughter's Aviva policy does too. It must be rarely used though as dealers always doubt the cover - usually I can convince them but I've twice had to call LV and have them explain to thick as st service advisors that it is fully comp for their car.