HMRC has released Revenue & Customs Brief 3 (2017) which announces a major change to HMRC’s policy in relation to supplies of pension fund management. Until the release of this brief HMRC accepted that all supplies of pension fund management services made by insurers were exempt from VAT. The change will mean that charges for the management of pension funds will become subject to VAT and no longer part of the statutory exemption for insurance services that applies until 1 January 2018. The exception is defined contribution pension schemes, where investment management services will qualify for VAT exemption under a different provision.
Therefore, supplies of pension fund management from insurers to defined benefit pension schemes will be subject to VAT from 1 January 2018 onwards.
Please see the attached newsletter for more information.