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HMRC internal manual

Employment Status Manual

Basic principles: how to work out the deemed payment: step five

Paragraph 7 Schedule 12 Finance Act 2000/Section 54(1) ITEPA 2003

Regulation 7(1) SI 2000 No.727

Step Five allows a deduction for payments by the intermediary for the worker’s benefit to an approved pension scheme.

No relief should be given for payments:

  • to an unapproved scheme. The approved pension scheme may be an occupational pension scheme or a personal pension scheme (which, from 6 April 2001, may be a stakeholder pension scheme);
  • made on behalf of the worker i.e. the worker gives the company the money to make a contribution;
  • made and then refunded. For example, where the scheme is over-funded or a contribution is made in error.