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HMRC internal manual

Business Income Manual

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Specific deductions: pension schemes: Pensions Act levy

S199 Finance Act 2004, The Pension Protection Fund (Tax) Regulations 2006, SI 2006 No 575, Regulations 20, 21

An employer may be required to pay a statutory levy (a ‘Pensions Act levy’) to the Pension Protection Fund or the Fraud Compensation Fund in relation to a scheme eligible for protection by those Funds. For further details on these, see RPSM05102050.

A payment of a Pensions Act levy is deemed to be a contribution to a registered pension scheme and so the rules at BIM46005 apply:

  1. The payment is an everyday cost of employing staff, in the same way as the pension contribution itself. In the case of a continuing trade the payment is an allowable deduction in computing the employer’s trade profits for tax purposes in the period when paid.
  2. A payment made after the trade has ceased is treated as being paid on the last day of trading.

A Pensions Act levy is not, however, subject to spreading (see BIM46010).