15 February 2007
HM Revenue and Customs has published revised guidance on the
test for determining whether employer contributions to occupational
pension schemes are tax deductible.
Since 6 April 2006 (A-Day), employer contributions to an
occupational pension scheme are deductible as an expense provided
that they are incurred wholly and exclusively for the purposes of
the employer's trade or profession. This has resulted in
uncertainty for employers, because of the way the provision is
being interpreted by individual inspectors.
HMRC has now published revised guidance in the Business Income
Manual. The guidance confirms that most payments made into a
pension from A-Day will be considered part of the normal costs of
employing staff and the 'wholly and exclusively' rules will only be
considered in limited circumstances.
