BIM44580 - Specific deductions: Employee benefit trusts: general purpose EBT contributions: timing of deductions: FA03/SCH24: overview

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).

Approach of FA03/SCH24

The aim of FA03/SCH24 is that deductions for providing benefits to employees through intermediaries such as EBTs should, as far as possible, be broadly the same (both in terms of timing and amount) as they would be if the employer had provided the benefits direct to the employees.

The ‘matching’ approach of FA03/SCH24 therefore reflects the fact that when employers provide remuneration and other benefits direct to their employees, in general:

• the benefits are taxable when received by the employees,
• the benefits, when received by the employees, give rise to a liability to employers’ NICs,
• the timing of any deduction for the employer’s expenditure is broadly aligned with the time that the employees receive remuneration for employment income tax purposes (FA89/S43),
• if the employee’s benefit is the personal use of an asset (for example a company car), no deduction would be given in computing the employer’s taxable profits for its capital expenditure in acquiring the asset or for the amount of the benefit on which the employee is taxed,
• if the employee’s benefit takes the form of the receipt of a beneficial loan from the employer, no deduction would be given in computing the employers’ taxable profits for making the loan or for the amount of the benefit on which the employee is taxed.