VAT On Your Investments

Published / Last Updated on 03/11/2017

VAT Tax on Fund ResearchVAT On Your Investments.

Many of you may not be aware but for most regulated financial services transactions and executions (i.e. buying pensions and investments) there is no VAT charged.

You do not pay VAT on bank charges, insurance, pensions and investments.  You do pay VAT on credit card charges and advice not related to a specific, regulated product e.g. generic financial advice and tax advice.


European law currently overseas ‘common trade’ area sectors e.g. financial services, which has been in the news this week regarding potential job losses in financial services.

What is not being covered widely is MiFID II  (the EU’s second Markets in Financial Instruments Directive) – this effectively creates the rules relating to the financial services industry with each EU country required to interpret the directive and implement in their country.

Trying to make investment charges more transparent

Part of the current drive to make investment charges clearer and easier to understand is forcing fund managers to have “clean charges” funds with no hidden or disguised charges to deliver an overall ‘Ongoing Charges Figure’ (OCF).   In the latest twist, MiFID II, which comes into force next year, requires fund managers to separate out their investment research costs.  Many fund managers outsource their markets, economic and other research costs.  Currently, as this is all linked to a regulated investment fund, there is no VAT.

More VAT?

HMRC is currently consulting on whether these research costs, as they will now be separated away from the regluated investment tranactions, be charged to VAT.

If fund managers absorb fund research budgets or use in house teams then this may alleviate the VAT problem, if they outsource to external research groups, then these external groups could be required to charge VAT for their services which could then have a knock on effect of your pension or investment charges being more expensive.


They always find a way to tax us.