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HMRC internal manual

Business Income Manual

Specific deductions: pension schemes: industry-wide schemes

As the payment of a pension contribution to a registered scheme is part of the normal costs of employing staff, it will usually be allowable expenditure. This applies also to where the contribution is to an industry-wide scheme, even though employees elsewhere in the industry may benefit from the payment.

If the employer’s sole object in making the pension contribution is to ensure that its employees receive their appropriate pensions, then a deduction for the contribution is not disqualified just because another pensioner, whose former employer has gone out of business, may also benefit from it.

Payments of expenses often result in benefits to a third party. A benefit to a third party is not, in itself, grounds for disallowing the expenditure provided that the benefit is merely incidental to the purpose(s) for incurring the expenditure. The expenditure will only be disallowable where the benefit to the third party is itself a purpose of the expenditure. For further guidance on incidental benefits see BIM37400 and BIM38250.