Part 4Pension schemes etc

Chapter 6Schemes that are not registered pension schemes

Employer-financed retirement benefit schemes

246Restriction of deduction for non-contributory provision

(1)

This section applies in relation to an employer’s expenses of providing benefits to or in respect of present or former employees under an employer-financed retirement benefits scheme in a case where—

(a)

the expenses do not consist of the making of contributions under the scheme, but

(b)

in accordance with generally accepted accounting practice they are shown in the employer’s accounts.

(2)

Unless the benefits are ones in respect of which a person is, on receipt, chargeable to income tax, the expenses—

(a)

are not deductible in computing the amount of the profits of the employer for the purposes of F1Part 2 of ITTOIA 2005 F2or Part 3 of CTA 2009 (trading income),

(b)

are not expenses of management of the employer for the purposes of F3Chapter 2 of Part 16 of CTA 2009 (expenses of management: companies with investment business), and

F4(c)

are not to count as ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012.

(3)

But where the benefits are ones in respect of which a person is, on receipt, chargeable to income tax—

(a)

if the expenses are allowed to be deducted in computing the amount of the profits of the employer to be charged under F5Part 2 of ITTOIA 2005 F6or Part 3 of CTA 2009 (trading income), they are deductible in computing the amount of the profits for the period of account in which they are paid, and

(b)

for the purposes of the operation F7in relation to the employer of F8section 76 of FA 2012 or Chapter 2 of Part 16 of CTA 2009, the expenses are referable to the accounting period in which they are paid.

(4)

In this section “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see section 393A of that Act).