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HMRC internal manual

Business Income Manual

Specific deductions: employee benefit trusts: general-purpose EBTs: deductions for employers’ contributions: timing of deductions

S38 Income Tax (Trading and Other Income) Act 2005, S1290 Corporation Tax Act 2009

The timing of a deduction for an employer’s contribution to a general-purpose EBT (see BIM44535) depends on:

  • when it is deducted in accounts prepared in accordance with general accepted accounting practice (GAAP), and
  • whether the deduction is deferred or permanently denied for tax purposes by specific tax legislation on the timing and allowability of deductions.

Advice on accountancy issues

HMRC staff should consult an HMRC compliance accountant for advice as to whether the accounts have been prepared in accordance with GAAP.

Employee benefit contribution legislation

The timing of deductions for contributions may be deferred.

The employee benefit contribution legislation broadly matches:

  • the timing and amount of employers’ deductions for employee benefit contributions, and
  • the timing and amount of benefits received by employees in the form of money or assets which are taxable and subject to employers’ National Insurance Contributions (under Class 1, 1A or 1B).

Additional rules apply to employee benefit contributions made or to be made on or after 1 April 2017 (CT) or 6 April 2017 (IT).  These rules may prevent a deduction being allowable at any time, even when qualifying benefits are provided.  This is explained more fully at BIM44571 and in the example at BIM44611

Guidance on the timing of deductions under the employee benefit contribution legislation is at BIM44575.

Unpaid remuneration

For guidance on the general rules governing the timing of deductions for unpaid remuneration see BIM47130.