EIM45615 - Employment income provided through third parties: exclusions: retirement benefits etc: employee pension contributions
Section 554T ITEPA 2003
Relevant step within section 554B
Relevant step within section 554C or 554D
Excluded pension contribution
Relevant benefits
Sourcing: direct or indirect
Sourcing: part or whole
How sections 554T to 554X are related
Section 554T prevents relevant steps from giving rise to Part 7A income if they are taken in respect of sums of money or assets derived from A’s pension contributions.
Relevant step within section 554B
A relevant step within section 554B will not give rise to Part 7A income if the sum of money or asset which is the subject of the step arises or derives from an ‘excluded pension contribution’ paid by A on or after 6 April 2011.
Relevant step within section 554C or 554D
A relevant step within section 554C or 554D will not give rise to Part 7A income if the sum of money or asset which is the subject of the step both:
- represents ‘relevant benefits’
- arises or derives from an excluded pension contribution paid by A.
Excluded pension contribution
An excluded pension contribution is a contribution which passes 7 tests. These tests are:
- A makes the contribution to an arrangement by way of a payment of a sum of money
- by virtue of this contribution, A acquires rights to receive relevant benefits under the arrangement (and nothing else)
- neither A nor any other individual is entitled to relief for the contribution under section 188 Finance Act 2004 (FA 2004) (registered pension schemes: relief for members’ contributions) - see PTM044100
- no relief from tax is given for the contribution by virtue of schedule 33 FA 2004 (overseas pension schemes: migrant member relief) or schedule 36 paragraph 51 FA 2004 (transitional corresponding relief) - see PTM111100
- no relief from tax is given for the contribution under one of the UK’s tax treaties - see PTM111600
- the contribution is not a repayment of any loan, nor does it have anything else to do with any loan
- the contribution has nothing to do with a sum of money or asset which has been the subject of a relevant step within section 554C(1)(d) - see EIM45070.
Relevant benefits
‘Relevant benefits’ has the same meaning as in Part 6 Chapter 2 ITEPA 2003 (employer-financed retirement benefit schemes) - see EIM15021, except that, here, ‘relevant benefits’ can include benefits charged to tax under Part 9 ITEPA 2003 (pension income).
Sourcing: direct or indirect
It makes no difference whether the sum of money or asset arises or derives directly or indirectly from the excluded pension contribution.
Sourcing: part or whole
If the sum of money or asset arises or derives partly but not wholly from the excluded pension contribution, treat the relevant step as being 2 relevant steps:
- one in relation to the sum of money or asset so far as it does arise or derive from the excluded pension contribution
- one in relation to the sum of money or asset so far as it does not.
Then apportion the sum of money or asset on a just and reasonable basis between those 2 relevant steps.
Section 554T only shelters the former.
How sections 554T to 554X are related
Sections 554T, 554U, 554V, 554W and 554X are exclusions relating to retirement benefits etc.
To the extent that they are applicable, apply them in the order:
- section 554U (pre-6 April 2006 contributions to EFRBS), see EIM45620
- section 554V (purchases of annuities out of pension scheme rights), see EIM45625 onwards
- section 554W (certain retirement benefits etc), see EIM45635 onwards
- section 554X (transfers between certain foreign pension schemes), see EIM45645 onwards.