(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)
Contributions paid by an employer to a retirement benefits
scheme should generally relate only to its own employees and their
service with that employer. Under the normal rules of Schedule D no
deduction is allowed in computing profits chargeable to tax unless
the expense was incurred wholly and exclusively for the purposes of
the employer’s own trade. This principle is built into
section 592(5) ICTA 88 which, in strictness, allows a deduction
only for amounts paid towards benefits for the participating
employer’s own employees. Cross subsidisation is only
acceptable to the extent permitted by
PSI21.2.13(see also
PSI5.1.8-9).
