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HMRC internal manual

Employment Income Manual

Pensions provided in a form other than cash: benefits provided to pensioners who are former employees

Pensions are usually paid in cash and there is no problem about the amount receivable. There are some cases, however, where the former employer meets the pecuniary liabilities of the pensioner or provides benefits in kind. These arrangements are unlikely to originate from an approved pension scheme before 6 April 2006 or a registered pension scheme from that date. But the arrangements may constitute a separate scheme and satisfy the definition of a non- approved scheme before 6 April 2006 or an employer-financed scheme on or after 6 April 2006. See EIM15020 for the relevant definitions and EIM15120 for guidance on the treatment of non-cash benefits provided by such schemes.

The legislation about benefits of employees or directors does not apply to Part 9 ITEPA. You may consider possible liability under Section 569 ITEPA 2003 or Section 633 ITEPA 2003, taking the view that the provision amounts to a voluntary pension (see EIM74005) or a voluntary annual payment (see EIM74011). There is a greater likelihood that such provision is chargeable as pension income where there is a series of payments.