BIM46194 - Specific deductions: pension schemes: pre April 2006: other approved schemes

A scheme that meets the conditions in ICTA88/S590 will be an approved scheme. It will be an exempt approved scheme (see BIM46105) if it meets further conditions in ICTA88/S592. Schemes that are approved, but are not exempt approved, are known as ‘just approved’ schemes.

‘Just approved’ schemes

In broad terms ‘just approved’ schemes are not established under irrevocable trusts, with the result that the funds created by the contributions and investments are not alienated from the employer.

There is only one tax advantage attached to a ‘just approved’ scheme. The employees are exempted from an income tax charge in respect of the employer’s contributions (ITEPA03 Part 6 Chapter 1).

Employers’ contributions to ‘just approved’ schemes

In the case of a trade or profession, employer contributions will be deductible as an expense provided that they are incurred wholly and exclusively for the purposes of the employer’s trade or profession ICTA88/S74 – corporation tax and ITTOIA05/S34 – income tax.

Unlike exempt approved schemes and unapproved schemes, there are no statutory rules on the timing of allowing deductions for contributions to ‘just approved’ schemes. The timing of any deductions for an employer’s contributions will follow the treatment of the contributions in the employer’s accounts prepared in accordance with generally accepted accounting practice.