Advising on the pension decision used to be VAT free. That is because of an exemption for insurance that made commission and fee based advice on commission products VAT free.
But now advice on auto-enrolment and pensions does not just include insurance products and we can no longer offer a VAT exemption for advice.
This is not a problem for larger employers who can generally reclaim the VAT, but many if not most of the Micro employers will not fall within the VAT threshold.
So the Government will be charging them 20% of the cost of advice, for taking it!
This cannot be how to improve decision making among SMEs and Micros.
Pension PlayPen urges the Government to reconsider the rules surrounding advice on auto-enrolment and especially around choosing a pension.
here’s what you’ve been saying
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Hi Henry- do you have any supporting evidence on this as we had not picked it up given that the advice does end up in a pension scheme? Thanks Jane
I can dig out the VAT rules form somewhere but my understanding is that it is the insurance element (not the pension) that gives the VAT exemption.