- HMRC has changed its policy so sponsoring employers can generally recover VAT on defined benefit pension scheme investment costs, effective from June 2025.
- This replaces the old approach that treated these costs as “dual use”; now the input tax is usually seen as the employer’s, though trustees may still reclaim in some cases.
- Employers may be able to recover more VAT than trustees, but they need proper evidence, especially VAT invoices addressed to the employer.
- VAT-registered trustees charging the employer for pension fund management services may also deduct input tax on investment costs, subject to normal partial exemption/non-business restriction rules.
- The new guidance creates both opportunities and risk, and organisations should review contracts, invoices, and existing VAT claims.
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.
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