BIM46090 - Specific deductions: registered pension schemes: pension protection fund

Part 2 of the Pensions Act 2004 introduced the Pension Protection Fund (PPF), and a Fraud Protection Fund, funded by levies on schemes eligible for protection. For further details on these see RPSM05102050.

A payment to the PPF is deemed to be a contribution to the pension scheme under FA04/S199 (Regulation 22 The Pension Protection Fund (Tax) Regulations 2006 [SI2006/0575]) and so should be treated as any other payment:

1. The payment to the PPF is an everyday cost of employing staff, in the same way as the pension contribution itself. In the case of a continuing trade the payment is an allowable deduction in computing the employer's trading profits for tax purposes in the period when paid.
2. A payment made to the PPF after the trade has ceased is treated as being paid on the last day of trading.

One exception is that a payment to the PPF is not subject to spreading (Regulation 21 The Pension Protection Fund (Tax) Regulations 2006).