700/17/13 Funded pension schemes

Part V8 HMRC Notices
Part V8 HMRC Notices | Commentary

700/17/13 Funded pension schemes

Part V8 HMRC Notices | Commentary

Funded pension schemes

January 2013

This notice cancels and replaces Notice 700/17 (November 2011)

1 Funded Pension schemes—an overview

Main narrative treatment—V3.410, V3.421, V4.122.

1.1 What is this notice about?

This notice provides guidance about claiming input tax on funded pension scheme expenditure for both employers and trustees.

It replaces the November 2012 edition. Paragraph 2.9 has been amended to include guidance on the recovery of VAT on management costs by professional trustees who are appointed to run a pension scheme.

1.2 What is a funded pension scheme?

A funded pension scheme is one in which the employer and employees' contributions are vested in separate trustees who may be individuals or corporate bodies. It is normally separate and distinct from the employer's business.

1.3 Why are there special rules for funded pension schemes?

Most employers set up their pension funds under trust deed and the appointed trustees control the funds. Each party (the employer and the trustees) has separate responsibilities, duties and activities, and has to consider their own ability to treat tax incurred as input tax. In running schemes various professional services are required (for example, solicitors, fund managers, actuaries). In practical terms it can be difficult to decide both to which person these services are supplied and for the purposes of which person's business they are used. This notice explains our view on these issues.

1.4 What about other kinds of pension schemes?

An employer may provide pensions to his employees by means of—


    —     an insurance based scheme whereby retirement benefits are secured through an insurance policy;


    —     an

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