BIM44590 - Specific deductions: Employee
benefit trusts: general purpose EBT contributions: timing of
deductions: FA03/SCH24: structure of the legislation
The basic structure of FA03/SCH24 is that:
- PARA1 (3) disallows a deduction for an
employee benefit contribution (if it would otherwise be due for a
period) to the extent that qualifying benefits or qualifying
expenses are not paid out of the contribution during the period or
within 9 months of the end of the period.
- PARA1 (4) allows a deduction in computing
the employer’s taxable profits for a later period to the
extent that qualifying benefits are paid in the later period (up to
a maximum of the amount disallowed under PARA1 (3)).
An example applying PARA 1(3) and PARA 1(4) is at
BIM44610.
Employee benefit contribution
’Employee benefit contribution’ is defined widely in
FA03/SCH24/PARA1 (2). It covers employers’ contributions to
EBTs. It also includes employers’ payments to other kinds of
intermediaries who may be required, or may have discretion, to use
them to provide benefits to employees of the employer (and from 6
April 2006 to former employees).
Qualifying benefits and qualifying expenses
‘Qualifying benefits’ are defined in
FA03/SCH24/PARA2, see
BIM44595.
‘Qualifying expenses’ are defined in
FA03/SCH24/PARA3, see
BIM44600.
Payments ‘out of’ employee benefit
contributions
It is not necessary to track the trustees’ precise use of
each employee benefit contribution to determine whether and
when:
- qualifying benefits or qualifying expenses
were provided or paid ‘out of’ a particular
contribution for the purposes of disallowing amounts under PARA1
(3), or
- qualifying benefits were provided
‘out of’ a particular contribution for the purposes of
giving a deduction for a later period under PARA1 (4).
There are special deeming rules in FA03/SCH24/PARA4, see
BIM44615.
