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HMRC internal manual

Business Income Manual

Specific deductions: registered pension schemes: recharging of contributions in multi-employer schemes

In a group pension scheme, the levels of contributions are likely to be set for the scheme as a whole. This does not prevent a deduction being allowed on the basis set out below.

If the amount paid to the group pension scheme is apportioned between the employing companies on a reasonable basis, informed by actuarial advice where appropriate, then you can accept that the amount attributed and recharged to each employing company is incurred wholly and exclusively for the purposes of that company’s trade.

The apportionment and recharging between different employing companies may be carried out after the end of the accounting period. However, deductions for such recharged amounts should be given to each of the sponsoring employers for the period of account in which the contributions are paid to the registered scheme on behalf of the group.

It is also worth noting that if no recharge has been made and the payer has not had full relief for the expenditure (on the basis that it was not wholly and exclusively for the purposes of its trade), then it may be appropriate for the company to consider whether a transfer pricing adjustment is appropriate. See INTM410000 onwards for guidance.


Holding Co makes a payment on behalf of the group into the group pension scheme of £90m. The accounting deduction in the group accounts for the period is only £50m. The group makes a reasonable estimate that of the £90m, £60m relates to Subsidiary A, £20m to Subsidiary B and £10m to Holding Co.

In this case, the group has made the pension contribution, part of which relates to an earlier period to that in which the accountancy deduction fell due. Relief is given in the period in which the payment is made, overriding the accountancy treatment. The position is the same whether the accountancy entry is in an earlier or later period. The group has made a reasonable attempt at a split, (subject to the spreading rules - see PTM043400) so Subsidiary A has a deduction for the year of £60m, Subsidiary B of £20m and Holding Co of £10m.