BIM44570 - Specific deductions: Employee benefit trusts: general purpose EBT contributions: timing of deductions

The timing of a deduction for an employer’s contribution to a general purpose EBT depends on:

• When it is deducted in accounts prepared in accordance with general accepted accounting practice (GAAP), and
• Whether the timing of that deduction is deferred for tax purposes by specific tax legislation.

In practice it will usually only be necessary to consider whether the way the contributions have been treated in the employer’s accounts is in accordance with GAAP if specific tax legislation such as FA03/SCH24 or FA89/S43 does not apply.

Periods ending on or after 27 November 2002

The timing of deductions for contributions made on or after 27 November 2002, if they would otherwise be allowable as a deduction for periods ending on or after 27 November 2002, may be deferred by FA03/SCH24.

FA03/SCH24 broadly matches:

• the timing and amount of employers’ deductions for providing employee benefits through intermediaries, and
• the timing and amount of benefits received by employees in the form of money (not loans) or assets which are taxable and subject to employers’ National Insurance Contributions (under Class 1, 1A or 1B).

Guidance on FA03/SCH24 is at BIM44575.

Periods ending before 27 November 2002

The timing of deductions for contributions made:

• before 27 November 2002, or
• on or after 27 November 2002 if provisions for them would otherwise be allowable as a deduction for periods ending before 27 November 2002

may be deferred by FA89/S43.

Guidance on the application of FA89/S43 to contributions to general purpose EBTs is at BIM44640.

Advice on accountancy issues

In any case in which the question of what constitutes GAAP is an issue, HMRC staff should consult their local HMRC accountant.

General purpose EBTs

In this guidance a ‘general purpose’ EBT means a trust set up to provide employees with benefits other than the following specific kinds of benefits:

• share-related benefits under employee share schemes set up to give employees a stake in the company or group by which they are employed - see BIM44515,
• pension and other benefits under retirement benefit schemes - see BIM44520,
• accident benefits - see BIM44525,
• healthcare benefits - see BIM44530.