- HMRC revised policy on VAT deduction for services related to occupational pension fund management.
- Employers can incur costs for pension fund administration and asset management.
- Previously, employers could recover VAT on administration costs but not on investment costs.
- In 2014, policy allowed VAT recovery on investment costs if employers contracted and paid for services.
- Dual use of investment costs allowed VAT recovery by both employers and trustees.
- From 18 June 2025, investment costs are no longer dual use; employers can recover all input tax.
- Trustees can recover input tax on pension fund management services if VAT-registered.
- Changes are subject to normal input tax rules and a four-year cap.
- Businesses may need new partial exemption special methods, effective from the tax year of submission.
- HMRC will publish guidance on the policy change by autumn 2025.
Source: icaew.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.
