Andrew Needham looks at the VAT consequences of owning a property in one’s pension fund.
It is common practice for pension funds, in the form of self-invested personal pension schemes and small self-administered schemes, to purchase commercial properties and rent them out using the rental income to finance the pension fund, with the building being held as an asset of the fund.
Registering for VAT
A commonly asked question in these circumstances is, “Can the pension fund register for VAT?” The simple answer is “yes”. A pension fund is treated in the same way as any other type of legal entity undertaking a business activity for VAT purposes and can register for VAT, reclaim input tax and submit VAT returns in just the same way as a normal business. When registering for VAT, it should register as a partnership between the fund and the beneficial owner.
