- HMRC has relaxed its approach to VAT recovery on Defined Benefit pension scheme costs.
- Sponsoring employers can now recover VAT on pension scheme investment activities.
- This change applies from 18 June 2025 and replaces the previous policy.
- All input tax on investment costs is now deductible by the employer.
- VAT registered trustees can also deduct input tax on investment costs if services were for business activities.
- Taxpayers using partial exemption or non-business restriction must adjust claims accordingly.
- The new rules simplify VAT recovery for pension schemes and employers.
- Employers must ensure they are the recipient of investment services to reclaim VAT.
- If a pension scheme has a higher VAT recovery rate, it may still be beneficial for it to receive investment services.
Source: crowe.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.
