SE15040 - Non-approved retirement benefits schemes: contributions made by employer

Section 595 ICTA 1988

For information about employee’s contributions see SE15090.

An employer’s contribution to a non-approved retirement benefits scheme is chargeable on an employee under Schedule E to the extent that the contribution is made with a view to the provision of “relevant benefits” (as defined at SE15020) for that employee or others (see SE15035). See example SE15420.

If the employer's contribution covers benefits for more than one employee it is apportioned among the employees in accordance with the separate benefits to be provided for each of them. See example SE15420.

The contribution is treated as income chargeable for the year of assessment in which that contribution is made. See SE15420

Contributions by an employer will nearly always be in cash. If the contribution is made by transfer of assets from the employer, the contribution is the market value of the asset at the time of transfer. (This text has been withheld because of exemptions in the Freedom of Information Act 2000)

Separately identifiable costs incurred by an employer in setting up or administering a scheme are not chargeable on employees under Section 595(1) ICTA 1988 as such costs cannot fund the provision of benefits.

There are some exceptions to the charge: see SE15050

(If for any reason any employer contributions are not so charged, make a note in the employee’s Permanent Notes sub-file or computer record historical notes. Any lump sum benefit subsequently paid to the employee that is attributable to such unassessed employer contributions is chargeable to tax when received: see SE15100.)