CTM41265 - Particular bodies: Trade unions: Provident benefits - nature of payment

ICTA88/S467 (2)

Provident benefits include any payment made to a member, or their representative, which is specifically authorised by the union's rules, for:

• sickness or personal injury,
• unemployment, apart from strike or “lock-out” pay,
• superannuation,
• accidents,
• loss of tools by fire or theft,
• funeral expenses of a member or their husband or wife,
• provision for the children of a deceased member,
• a member's marriage dowry.

The administration costs involved in providing these are also allowable as provident benefits. Work them out as a portion of the costs in the union's accounts.

If a union's rules allow it to take out a group insurance policy to cover payments of provident benefits to members the premiums paid are also allowed as provident benefits. However there is no relief for the actual payments made by the insurance company.

If the union's rules allow it to pay for:

• certain legal expenses,
• compensation for accident or injury, or
• representing members at industrial tribunals in unfair dismissal cases

these are also allowed as provident benefits. If a trade union has its own legal section work out the amount you can allow by apportioning the charge in the accounts. No other payments for legal expenses are allowable. It does not make any difference whether the payments are made directly to the legal advisers rather than the member. If the union rules guarantee a specific sum it must not exceed the limit given in ICTA88/S467 (1), which is covered in CTM41260. However, relief can be given for larger payments if the rules allow for payment at the union's discretion.

IPTM6100+ deals with the taxation of benefits received from policies.