PSI20.1.4 - Funding and Surpluses: Funding General - Revenue Concern

(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)

Approval under Chapter 1, Part XIV ICTA 1988 of a scheme set up under irrevocable trusts - which in consequence will automatically qualify as an “exempt approved scheme” (see PSIPart 1 Section 3 PSI1.3.1) - give certain tax advantages:

1. income from the scheme’s investments or deposits is exempt from income tax (section 592(2) ICTA 1988),
2. gains made on the disposal of those investments or deposits are exempt from capital gains tax (section 149B(1)(g) Capital Gains Tax Act 1979,
3. the employer’s contributions to the scheme automatically qualify as an expense in computing the profits for income tax or corporation tax purposes,
4. the employee’s contributions to the scheme are allowed as an expense in assessing liability to tax under Schedule E (section 592(7) ICTA 1988).