RPSM05400050 - Employer Pages: Contributions and tax relief: Employer contributions: Deemed contributions

Payments treated as contributions

There are certain payments related to registered pension schemes which although, not strictly contributions to a registered pension scheme are treated as if they were contributions by the pensions legislation. This means that employers can claim relief in respect of these payments in exactly the same way as they claim relief on contributions to registered pension schemes.

Payment of deficiency on winding up.

A scheme that is not a money purchase scheme may not have enough assets to cover its liabilities when it winds up. In these circumstances

• section 75 Pensions Act 1995, or
• article 75 Pensions (Northern Ireland) Order 1995 (S.I. 1995/3213 (N.I. 22))

may impose a liability on an employer to make good the deficiency.

Where an employer makes a payment to the trustees or manager of a registered pension scheme this will be deemed to be a contribution and so considered for tax relief.

See RPSM05102040 for further details.

Pension Levies

Part 2 of the Pensions Act 2004 established a Pension Protection Fund and a Fraud Compensation Fund. Statutory levies paid by employers to these funds are not contributions made to a registered pension scheme and so would not normally qualify for relief under section 196 FA 2004. However regulation 21 of The Pension Protection Fund (Tax) Regulations 2006, SI2006/575 provides that the statutory levies will be deemed contributions under section 199 FA 2004 which means that tax relief will be given for payment of the statutory levies by an employer - for example, where a sponsoring employer pays, or provides a scheme with funding for, the levy payments.

The provision in regulation 21 of The Pension Protection Fund (Tax) Regulations 2006 means that any relief given to a sum paid by an employer on account of any of the Pensions Act levies will not be spread.

See RPSM05102050 for further details.