“Advice is not exempt because it feels valuable. Exemption applies because the law says it does.”
In the world of financial services, there’s a persistent (and often convenient) misunderstanding: that all financial advice is VAT-exempt. It isn’t. And it’s time we stopped pretending otherwise.
As someone working to empower consumers and advisers alike through transparency and integrity, I find it troubling when financial intermediaries insist their entire service is exempt from VAT—even when much of what they do is clearly taxable planning or consultancy work. Either they’re misinformed. Or they’re misrepresenting the facts—to clients or the taxman.
So, let’s clear the fog. Here’s what the law actually says.
📌 VAT Exemption: What It Covers—and What It Doesn’t
✅ VAT-Exempt: Intermediation of Financial Products
HMRC defines VAT-exempt services under the Value Added Tax Act 1994 Schedule 9 Group 5, which includes certain financial services—but only when specific criteria are met.
Per VAT Notice 701/49 (Section 2):
“General advice about financial services is not exempt from VAT. The exemption applies to transactions involving the movement of money or dealing in financial instruments.”
And according to HMRC VATFIN7210:
“To be acting as an intermediary, a person must bring together, with a view to the provision of financial services, persons who are seeking and persons who provide those services.”
In short: to claim VAT exemption, you must act as a go-between in a specific financial transaction.
❌ Standard-Rated (VAT-Applies): Financial Planning, General Advice, Consultancy
Planning someone’s financial life, mapping out pensions, retirement goals, tax strategies, cashflow models, or coaching them to make informed decisions?
That’s not intermediation.
It’s a VAT-able supply, even if it’s brilliant, valuable, and life-changing. HMRC makes this clear:
From VATFIN7600 – Independent Financial Advisers:
“Fees or commission for advice-only services are always taxable.”
🚩 The Problem: Treating the Whole Service as Exempt
Here’s what happens too often:
An adviser offers a bundled service—some planning, some sales—and treats all of it as VAT-exempt. No separation. No apportionment. No evidence of intermediation. Just blanket exemption.
That’s not compliant. That’s convenience masquerading as compliance.
Even the Personal Finance Society noted this in their own VAT guidance:
“Put simply, general financial advice is taxable, and intermediation is VAT-exempt.”
(Source – PFS Direction Note No. 5)
To quote HMRC again:
“There must be evidence of the intermediary function to support exemption.”
So if you’re not introducing a provider, arranging a regulated product, or playing a defined role in the transaction, then claiming exemption could be misrepresentation.
⚖️ Why This Matters
This isn’t just a technicality—it’s a matter of integrity.
- Clients deserve transparency. If they’re paying for planning, they should know what part of that is subject to VAT—and why.
- Advisers deserve clarity. Many do want to do the right thing, but misinformation spreads fast in our industry.
- The profession deserves credibility. When rules are bent for commercial convenience, trust erodes.
💡 The Solution: Unbundle and Be Honest
If you’re offering both planning and intermediation, here’s what best practice looks like:
- Separate the services in your client agreement.
- Apply VAT only to the planning portion (as per the law).
- Provide clear documentation showing how you meet the criteria for intermediation.
If you only provide financial planning without selling or arranging financial products—you are not exempt, full stop.
🔚 Final Word
The VAT rules aren’t murky. The profession just doesn’t want to look too closely. But as we move toward a more transparent, Aquarian model of financial services—where planning is client-centred, product-free, and values-aligned—it’s vital we stop conflating planning with sales.
Financial planning and financial intermediation are not the same thing. And pretending otherwise doesn’t just risk a tax penalty. It risks the future of the profession itself.
—
Further Reading & References:
- VAT Notice 701/49: Finance – GOV.UK
- VATFIN7210 – When is someone acting as an intermediary?
- VATFIN7600 – Independent Financial Advisers
- PFS Professional Direction: VAT and Adviser Charging (PDF)
If you’re a regulated firm looking to create a separate, unregulated financial planning service—VAT-applied and fully compliant—we can help. At the Academy of Life Planning, we guide you through the compliance landscape, help you structure your proposition clearly, and ensure it’s so valuable your clients will be glad to pay for it. Get in touch to explore how you can build a planning-led, integrity-driven offering that stands on its own.
Join the M-POWER Movement: From Financial Extraction to Personal Liberation
We’re not here to sell you products. We’re here to help you reclaim your power.
The old financial system thrived on confusion, dependency, and hidden fees.
The new era is about clarity, confidence, and conscious choice.
What You’ll Gain
Empowered Planning
Learn how to manage your money without salespeople or smoke and mirrors.
Flat fees. No jargon. Total control.
Purposeful Enterprise
Turn your experience into a mission-led practice.
Whether you guide others or just guide yourself — we’ll show you how.
Conscious Evolution
Grow beyond old paradigms. Step into Aquarian leadership, where financial planning meets soul purpose.
How to Begin
Join the M-POWER Community
→ Free access to resources, events, and peers redefining the future of planning.
→ Community Link
Book a Discovery Call
→ Personal guidance to align your money with meaning — no sales, just insight
→ Booking Page
Be the Ripple
→ Share this post or invite others to the movement.
→ Join Planning My Life Facebook Group
The future isn’t built on percentage fees.
It’s built on purpose, participation, and personal agency.
Let’s shift the system — one planner at a time.
#MPOWER #FinancialFreedom #AquarianPlanning #SelfAgency #FlatFees #DimensionalLeadership #GAMEPlan #FinancialTransparency
Academy of Life Planning 