Whether qualifying benefits provided during a particular period were paid ‘out of’ an employer’s contribution (which would otherwise be deductible in computing the employer’s taxable profits for the period) is relevant in deciding to what extent the deduction is:
Whether qualifying expenses paid by the EBT trustees during a particular period were paid ’out of an employer’s contribution (which would otherwise be deductible in computing the employer’s taxable profits for the period) is only relevant in deciding to what extent the deduction is disallowed for a period by FA03/SCH24/PARA1 (3).
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 deductions under PARA1 (3) or allowing deductions under
PARA1 (4). There are special deeming rules in FA03/SCH24/PARA4.
In determining whether qualifying benefits have been provided
or qualifying expenses have been met ‘out of’ the
contribution concerned, other receipts and expenses of the EBT are
ignored.
| 1/2/2004 | Initial amount settled to create EBT (capital expenditure) | £1,000 |
| 2/2/2004 | Company contribution to EBT | £500,000 |
| 1/6/2004 | EBT incurs non-qualifying expenditure | (£5,000) |
| 1/9/2004 | EBT receives bank interest | £10,000 |
| 1/12/2004 | EBT pays qualifying benefits to employees | (£500,000) |
The qualifying benefits paid to employees on 1/12/2004 are
deemed to have been paid ‘out of’ the £500,000
contributed to the EBT on 2/2/2004.
The other income received by the trustees (£11,000) and
the non-qualifying expenses (£5,000) are ignored for this
purpose.
