HMRC Updates VAT Deduction Policy for Pension Fund Management, Ends Dual Use Classification

• HMRC announced a policy change on VAT deduction for pension fund management.
• Investment costs will no longer be considered for dual use.
• Trustees supplying management services to employers can deduct input tax if VAT-registered.
• Deductions are subject to normal rules and a 4-year cap.
• New policy effective from 18 June 2025; guidance to be published by autumn 2025.
• Change follows a European Court decision allowing employers to recover input tax on investment costs.
• Previous policy required apportionment for dual use of investment costs.
• Now, all input tax is considered the employer’s and deductible by them, following normal rules.

Source: pensionsage.com

Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.

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