Is VAT charged on financial advice fees?
It depends on what the fee pays for: advice that leads to arranging a financial product is generally exempt from VAT, while standalone advice or a report with no product arranged can be charged at the standard 20% rate.
The distinction is set by HMRC’s rules on the financial services exemption, not by the FCA, so the same firm can quote some services with VAT and some without.
Why the answer varies
UK VAT law exempts certain financial services, including acting as an intermediary in arranging them. HMRC treats advice as part of that exempt intermediary service when it is directed at arranging a product for you. Advice that is not, such as a standalone financial plan, a report, or a review you take away and act on yourself, can fall outside the exemption.
The treatment depends on the facts of each service. A firm that is VAT-registered should know which of its services carry VAT. A firm whose taxable turnover is below the VAT registration threshold is not required to register, and an unregistered firm does not charge VAT.
What to ask
- Does your quote include VAT, and on which parts?
- If I take the recommendation and do not proceed, does the treatment change?
- Is the fee for a one-off plan or report quoted with or without VAT?
A 20% difference on a £3,000 fixed fee is £600, so it is worth confirming before you compare quotes.
Related definitions
Sources
General information only, not regulated financial advice or a personal recommendation. FinancialAdvisor.co.uk is not authorised or regulated by the Financial Conduct Authority. Figures are labelled with their source and date; they describe the market, not any firm, and are not quotes. Spotted an error? Report it and we will correct it.