The following Value Added Tax guidance note by Tolley provides comprehensive and up to date tax information covering:
This guidance note provides an overview of the VAT treatment of funded pension schemes.
A funded pension scheme is established either as a personal or company scheme to provide retirement pensions. The company and / or the employee pay contributions to be invested in the fund during the employee’s working life. The fund is held with separate trustees who can be individuals or corporate bodies and the pension scheme is normally separate from the employer’s business.
An employer could opt to use one of the following to provide a pension to its employees:
HMRC has finally published its long awaited guidance on the VAT treatment of costs associated with defined benefit pension schemes. Significantly HMRC has stated that employers with a defined benefit scheme (final salary scheme) are allowed to continue to use the historic concession called the 70:30 split going forward. This concession is explained below, but in summary, enables employers to recover 30% of the VAT incurred. This concession was to be removed with effect from 31 December 2017.
However, it is important to note that other alternative VAT recovery options that were outlined in previous publications issued
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