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HMRC internal manual

Employment Income Manual

Employer-financed retirement benefits schemes: general definitions

Section 393A ITEPA 2003 (as amended by Section 249(3) FA 2004)

[Notice: the guidance on this page should be read with the notice at the top of EIM15015]

Employers frequently make financial provision for the retirement or death of their employees by setting up a pension scheme or fund or similar arrangement. The employer may make contributions in advance in order to fund the benefits (a funded scheme) or simply pay benefits on retirement or death (an unfunded scheme). All such arrangements are retirement benefits schemes (see definition below).

A receipt after 5 April 2006 is chargeable under this legislation only if it is provided under an employer-financed retirement benefits scheme. So when dealing with such a receipt do not try to apply the guidance that deals with non-approved schemes.

A non-approved retirement benefits scheme will have automatically become an employer-financed retirement benefits scheme at 6 April 2006 so long as it met the definition of an employer-financed retirement benefits scheme set out in Section 393A ITEPA 2003.

An employer-financed retirement benefits scheme is defined as a scheme that consists of or includes relevant benefits (Section 393A(1) ITEPA 2003). “Relevant benefits” are defined by Section 393B ITEPA 2003. See EIM15021 for more information.

‘Scheme’ is defined as including a ‘deed, agreement, series of agreements or other arrangements’ (Section 393A(4) ITEPA 2003). It does not have to be a formal document and schemes do not have to adopt any particular form. See EIM15048 for more information.

In cases where it is claimed that the facts of the case do not constitute an employer-financed retirement benefits scheme please refer the case to Pension Scheme Services (Technical), FitzRoy House, Castle Meadow Road, Nottingham NG2 1BD.