Loading…

Responding to the impact of COVID-19

We'll be providing you, your charity and your business with regular updates to help you manage during these uncertain times. … Read more

Webinar: VAT and COVID-19 update for charities

In this webinar, VAT Partner Socrates Socratous shares the latest on VAT for charities including the COVID-19 announcements of the deferral of VAT payments, no … Read more

Leadership and Management Skills webinar series

These webinars allow you to bolster your knowledge and confidence by putting leadership theory into practice. … Read more

Find us quickly

130 Wood Street, London, EC2V 6DL
enquiries@buzzacott.co.uk T +44 (0)20 7556 1200

Budget 2020: Investment Management and Financial Services - VAT.

The government will undertake a review of the UK’s funds regime during 2020. This will cover indirect tax and direct tax, and regulation, and consider the case for policy changes.

About the author

Linda Skilbeck

+44 (0)20 8037 3114
skilbeckl@buzzacott.co.uk
LinkedIn

11 March 2020

A consultation paper published as part of the Budget will ask whether there are changes that could help to make the UK a more attractive location for companies used by funds to hold assets. The review will also consider the VAT treatment of fund management fees and other aspects of the UK’s funds regime.

As announced on 4 March 2020 the government is legislating to clarify when fund management services are exempt from VAT. The Value Added Tax (Finance) Order, SI 2020/209, widens the scope of the fund management exemption to apply to pension funds that meet certain criteria, and removes the requirement for certain funds to invest wholly or mainly in securities for the exemption to apply. This version replaces earlier legislation which was withdrawn to give businesses more time to prepare. The new exemption applies from 1 April 2020.

The only material difference for the fund management exemption from the earlier version is that qualifying pension funds must be established in the UK or EU.

The government is also to set up an industry working group to review how financial services are treated for VAT purposes. This is clearly a review of the position after the end of the transition period following the UK’s exit from the EU.

What should you do?

Managers of affected UK and EU funds will have to exempt their services from 1 April, and should consider whether they or their funds will bear the additional irrecoverable VAT cost. Managers of non-EU pension funds may continue to treat their services as outside the scope of UK VAT with input tax recovery.

Read more on the Budget here.

Speak to an expert

If you have a query about any of the topics mentioned in this article, please fill in the form below and one of our experts will be in touch.