RPSM05102035 - Technical Pages: Contributions and tax relief: Employer contributions: Contributions made in-specie

Contributions made in-specie

In-specie contributions are not allowed. The legislation only permits monetary contributions. However, it is possible for an employer to agree to pay a monetary contribution and then to settle this debt by way of a transfer of an asset or assets.

For example, if an employer wishes to pay a contribution he cannot do this by merely saying 'take this asset and whatever it is worth that is my contribution'.

There must be

• a clear obligation on the employer to pay a contribution of a specified monetary sum, say, £10,000. This needs to create a recoverable debt obligation.
• a separate agreement between the scheme trustees and employer to pass an asset to the scheme for consideration.
• If the scheme agrees, the cash contribution debt may be paid by off set against the consideration payable for the asset. This is the scheme effectively agreeing to acquire the asset for its market value.

If the asset market value is lower than the contribution debt the balance will be paid in cash.

If the cash contribution debt is not created, then the transaction is the acquisition of an asset by the scheme not a contribution.