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HMRC delays pension fund management VAT change

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HMRC has decided to delay until 1 April 2019 the withdrawal of its practice of allowing insurers to treat their supplies of non-special investment fund pension fund management services as exempt from VAT. The withdrawal had originally been announced for 1 January 2018. HMRC has announced the delay to give insurers more time to implement the changes.

This revised policy will bring the VAT treatment of pension fund management by insurers into line with that for non-insurers, reflecting the government’s acceptance that relevant litigation in the CJEU is now final and there will be no further review of the rules in this area before the UK exits the EU. Pension fund management services provided by insurers relating to defined contribution pension funds now qualify for exemption in accordance with the CJEU decision in ATP Pension Services.

HMRC has amended Revenue and Customs Brief 3/2017 to reflect the revised date (see

In a recent change to its VAT Input Tax (VIT) manual, HMRC confirmed that the existing rules for input tax deduction (the 70/30 split) will continue to be available to taxpayers, together with the newer options introduced following the CJEU decision in PPG Holdings [2014] STC 175, such as the tripartite contract option. Which option is applied will depend on whether the employer does or does not directly contract and pay for the services used to run the pension scheme.

Issue: 1378
Categories: News