- Policy Change Announcement: The brief details a significant policy update allowing employers to fully recover input tax on investment costs associated with pension fund management, following the Court of Justice of the European Union’s ruling in the PPG case, effective from 18 June 2025.
- Removal of Dual Use Concept: HMRC will no longer consider investment costs as having dual use between employers and pension fund trustees, enabling employers to deduct all associated input tax without the need for apportionment, while trustees can also claim deductions for services they provide to employers if VAT-registered.
- Implications for Businesses: Companies may need to develop new partial exemption special methods (PESMs) to align with this updated policy on VAT recovery, with further guidance expected from HMRC by autumn 2025.
Source gov.uk
