PSI5.1.8 - Contributions by Employers: General - Contributions Only for Own Employees

(This archived guidance relates to HMRC discretionary practice before the 6th April 2006. For current guidance on Registered Pension Schemes see the Registered Pension Schemes Manual)

[PN5.6]

Where there is only one employer our test of the basic requirements in PSI5.1.7a and b is straightforward. But with centralised schemes the position is more complicated. Each employer should generally contribute only in respect of its own employees and in relation to their remuneration from and service with that employer (see PSI21.2.14). If the contributions paid by a particular employer are disproportionately high, that employer is subsidising the other participating employers. Such cross-subsidies are contrary to the principle in section 592(5) that:

"The amount of an employer's contributions which may be deducted ........... Shall not exceed the amount contributed by him under the scheme in respect of employees in a trade or undertaking in respect of the profits of which the employer is assessable to tax ........ ."

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