HMRC Allows VAT Recovery on Employer Pension Fund Investment Costs from June 2025

• HMRC has updated its stance on VAT recovery for employer pension schemes.
• Previously, VAT on investment management or consultancy services for employer pension funds was not recoverable by employers.
• VAT on pension fund administration costs remains recoverable by employers.
• From 18 June 2025, VAT on investment costs is recoverable as input tax by the sponsoring employer.
• Investment costs typically include investment management and advisory services.
• VAT is chargeable on management of directly held investments by Defined Benefit schemes.
• Management of investments in pooled funds is exempt from VAT, so no change in VAT accounting is needed.
• Investment advisory services are subject to VAT and should be recoverable by employers under normal rules.
• Claims are limited to a four-year cap, and it is unclear if claims for costs before 18 June 2025 will be accepted.
• The change offers an opportunity to review pension scheme arrangements from a VAT perspective.

Source: saffery.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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