The insurer says the VAT cut, which Darling announced in today’s pre-Budget report, will reduce some of the fees paid to external property managers and surveyors – for example, VAT on the property manager’s annual charge will fall by £12.87 a year to £77.25.
But Sipp charges are already VAT free for insurance companies – it is only when external specialists are involved that the tax becomes payable on their services.
Standard Life head of pensions policy John Lawson says: “The reduction in VAT will provide a small reduction in fees for some Sipp investors who invest in commercial property. Non-insurance Sipp providers also charge VAT on their administration fees. Whilst this means that VAT on charges levied by Sipp providers not classed as insurers will fall by 2.5 per cent, their customers are still paying 15 per cent more tax on their fees than the customers of [insurance companies].”