246Restriction of deduction for non-contributory provisionU.K.
(1)This section applies in relation to an employer’s expenses of providing benefits to or in respect of present or former employees under an employer-financed retirement benefits scheme in a case where—
(a)the expenses do not consist of the making of contributions under the scheme, but
(b)in accordance with generally accepted accounting practice they are shown in the employer’s accounts.
(2)Unless the benefits are ones in respect of which a person is, on receipt, chargeable to income tax, the expenses—
(a)are not deductible in computing the amount of the profits of the employer for the purposes of [F1Part 2 of ITTOIA 2005 (trading income) or] Case I or II of Schedule D,
(b)are not expenses of management of the employer for the purposes of section 75 of ICTA (expenses of management: companies with investment business), and
(c)are not to be brought into account at Step 1 in section 76(7) of ICTA (expenses of insurance companies) in respect of the employer.
(3)But where the benefits are ones in respect of which a person is, on receipt, chargeable to income tax—
(a)if the expenses are allowed to be deducted in computing the amount of the profits of the employer to be charged under [F2Part 2 of ITTOIA 2005 (trading income) or] Case I or II of Schedule D, they are deductible in computing the amount of the profits for the period of account in which they are paid, and
(b)for the purposes of the operation of section 75 or 76 of ICTA in relation to the employer, the expenses are referable to the accounting period in which they are paid.
(4)In this section “employer-financed retirement benefits scheme” has the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see section 393A of that Act).
Textual Amendments
F1Words in s. 246(2)(a) inserted (6.4.2006) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 650(2), Sch. 2 para. 161 (with Sch. 2)
F2Words in s. 246(3)(a) inserted (6.4.2006) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 650(3), Sch. 2 para. 161 (with Sch. 2)
Modifications etc. (not altering text)
C1Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 12
C2Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 13(5)
C3Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 9, 10
C4Pt. 4 Ch. 6 excluded (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 25
C5Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 26
Commencement Information
I1Ss. 160-274, 281, Schs. 30-35 in force at 6.4.2006 but any power to make an order or regulations under those provisions may be exercised at any time after Royal Assent, see s. 284