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Section 246 Restriction of deduction for non-contributory provisionC1I1

United Kingdom

(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 F2or Part 3 of CTA 2009 (trading income),

(b)

are not expenses of management of the employer for the purposes of F3Chapter 2 of Part 16 of CTA 2009 (expenses of management: companies with investment business), and

F4(c)

are not to count as ordinary BLAGAB management expenses of the employer for an accounting period for the purposes of section 76 of FA 2012.

(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 F5Part 2 of ITTOIA 2005 F6or Part 3 of CTA 2009 (trading income), 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 F7in relation to the employer of F8section 76 of FA 2012 or Chapter 2 of Part 16 of CTA 2009, 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).

Annotations

Textual amendments

F1

Words 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)

F2

Words in s. 246(2)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 578(2)(a) (with Sch. 2 Pts. 1, 2)

F3

Words in s. 246(2)(b) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 578(2)(b) (with Sch. 2 Pts. 1, 2)

F4

S. 246(2)(c) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 120(2)

F5

Words 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)

F6

Words in s. 246(3)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 578(3)(a) (with Sch. 2 Pts. 1, 2)

F7

Words in s. 246(3)(b) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 578(3)(b) (with Sch. 2 Pts. 1, 2)

F8

Words in s. 246(3)(b) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 120(3)

Modifications

C1

Pt. 4 Ch. 6 excluded (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 25

Commencement

I1

Ss. 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

Notes on Part 4

Modifications

C1

Pt. 4 modified (N.I.) (1.4.2006) by The Firemens Pension Scheme Order (Northern Ireland) 2006 (S.R. 2006/210), arts. 1(2), 103

C2

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 9, 10

C3

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 12

C4

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 13(5)

C5

Pt. 4 modified (6.4.2006) by The Pension Protection Fund (Tax) Regulations 2006 (S.I. 2006/575), regs. 1, 26

C6

Pt. 4 modified (31.12.2007) by Police and Justice Act 2006 (c. 48), s. 53(1), Sch. 3 para. 7; S.I. 2007/3203, art. 3(b)

C7

Pt. 4 modified (1.7.2008) (N.I.) (with effect in accordance with reg. 1 of the amending Rule) by The Health and Social Care (Pension Scheme) Regulations (Northern Ireland) 2008 (S.R. 2008/256), regs. 1, 124(1) (with regs. 134, 258)

C8

Pt. 4 modified by The Taxation of Pension Schemes (Transitional Provisions) Order 2006 (S.I. 2006/572), reg. 5A (as inserted (6.4.2006) by S.I. 2008/2990, arts. 1(1), 3)

C9

Pt. 4 applied (21.7.2009) by Finance Act 2009 (c. 10), Sch. 35 para. 18

C10

Pt. 4 modified (19.7.2011) by Finance Act 2011 (c. 11), Sch. 18 para. 14(3)

C11

Pt. 4 applied (with modifications) (with application in accordance with Sch. 22 para. 1 of the amending Act) by Finance Act 2013 (c. 29), Sch. 22 para. 1(2)

C12

Pt. 4 modified (17.7.2014) by Finance Act 2014 (c. 26), Sch. 6 para. 1(2)(3)

C13

Pt. 4: power to amend conferred (17.12.2014) by Taxation of Pensions Act 2014 (c. 30), s. 4(3)

C14

Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 1

C15

Pt. 4 modified (15.9.2016) by Finance Act 2016 (c. 24), Sch. 4 para. 9(2)

C16

Pt. 4 modified (with effect in relation to the tax year 2024-25 and subsequent tax years) by The MPs’, Senedd and Assembly Pension Schemes (Tax) Regulations 2025 (S.I. 2025/52), regs. 1(2)(3), 6

C17

Pt. 4 modified (14.7.2026 for the tax year 2014-15 and subsequent tax years) by The Public Service Pension Schemes (Rectification of Unlawful Discrimination) (Tax) Regulations 2026 (S.I. 2026/673), regs. 1(2), 10