01
Financial context is not enough
A service supplied to a financial business is not automatically exempt. The exact activity, contractual role, consideration and whether the supplier brings about a transaction can determine liability.
- Credit and lending
- Payment and transfer services
- Intermediary activity
- Advisory, technology and administration fees
02
Exempt income changes cost recovery
Businesses making both taxable and exempt supplies normally need direct attribution and a partial exemption method. A values-based standard method may become distorted by large balances, one-off transactions or overseas supplies.
- Direct attribution
- Residual cost recovery
- Special methods
- Specified and overseas supplies
Primary sources
Tax guidance changes. These official sources were checked on 31 August 2026.
VAT Notice 701/49: financeVAT Notice 706: partial exemption