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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Corporation Tax: management expenses: pension contributions: timing of relief

Where the employer makes a contribution to a registered pension scheme and it is paid in respect of the company’s investment business (CTM08344+), then it will be allowable in the accounting period to which it is ‘referable’ ICTA88/S75A. Under FA04/S196(3)(b) a contribution will be referable to the accounting period in which it is paid. It follows that relief is given in the accounting period in which the contribution is paid, subject to the provisions in respect of spreading at FA04/S197 &S198 and FA04/S199 where it is to be allowed for an earlier period as below.

Spreading

FA04/S197 requires the spreading of relief for expenses of management broadly where employer contributions paid in a year exceed 210% of those paid in the previous year. There is guidance on this at PTM043400 onwards.

Payments on cessation

Any expenditure paid after a company has ceased to be a company with investment business cannot as a general rule be allowed as an expense of management (the company would no longer qualify for relief under S75), however that will not necessarily be the case for contributions to pension schemes, see CTM08347.

Sums paid to the trustees of a registered pension scheme in discharge of any liability of the employer under Pensions Act 1995/S75 (or Article 75 Pensions (Northern Ireland) Order 1995 (SI1995/3213 (N122)), (CTM08354), which are paid in respect of the investment business (CTM08347) fall within FA04/S199(4). The payment is then treated as if it were a contribution being made on the last day the business was carried on, and is relieved in the period that includes that date. This only applies to payments falling within FA04/S199.