BIM46150 - Specific Deductions: Pension Schemes: Anti Avoidance
This guidance applies to accounting periods ending on or after 6 April 2006.
Part 4 Finance Act 2004 contains three anti-avoidance measures in relation to employer contributions to registered pension schemes and employer-financed retirement benefits schemes. The two measures relating to registered pension schemes are contained in FA04/S196A and the measure relating to employer-financed retirement benefits schemes is contained in FA04/S246A.
The measures are designed to deter the creation of devices which seek to generate a deduction for an employer’s contribution to an EFRBS effectively ahead of the benefits being paid from it, contrary to the intent of the EFRBS tax legislation.
If the provision of benefits under a registered pension scheme is dependent upon benefits not being provided under an employer financed retirement benefits scheme, then the relief for the contribution to the registered pension scheme is restricted (FA04/S196(2)).
If the transfer value of rights under a registered pension scheme is reduced because benefits are provided under an employer financed retirement benefits scheme then the relief for the contribution to the registered pension scheme is restricted (FA04/S196A(3)).
See page RPSM05102140 of the Registered Pension Schemes Manual (RPSM) for further guidance on these two measures.
If the provision of benefits under an employer financed retirement benefits scheme results in the reduction of benefits payable to an employee under a registered pension scheme, then the expense to the employer of providing the benefits under the employer financed retirement benefits scheme is not an allowable deduction in arriving at the trading profits (FA04/S246A).
Where there has been a restriction of relief under FA04/S196A the FA04/S246A(3) prevents a double disallowance of relief by disapplying FA04/S246A to the extent that relief has been denied by FA04/S196A.
There are complicated measures but assistance can be sought from Pension Scheme Services (Technical), Yorke House, Castle Meadow Road, Nottingham NG2 1BG where necessary.
