Employer Contributions

Question 1

Are there any restrictions to the amount an Employer can contribute or amount of schemes they can set up?

Answer 1

No

Question 2

The amount of a pension contribution on behalf of an Employer or connected person needs be in proportion to what?

Answer 2

The amount of work they undertake

Question 3

If the local tax inspector believes an Employer contribution is not in proportion to the amount of work a Director or connected person has done what is the implication?

Answer 3

It will fail the wholly and exclusively rules and will not receive tax relief.

Question 4

When is tax relief provided to a company when making pension contributions?

Answer 4

In the accounting period in which the payment is made

Question 5

What can happen to an Employer contribution if it creates a loss?

Answer 5

It can be carried back to previous accounting periods

Question 6

Where a large single (excess) contribution is made what is the treatment of corporation tax relief?

Answer 6

It is spread over several accounting periods

Question 7

What are the 2 definitions of a large single premium/contribution?

Answer 7

1. Exceeds 210% of contribution in previous accounting period and:
2. The excess amount which exceeds 110% of the previous contribution is £500,000 or more

Question 8

What is the exception when defining a large single contribution?

Answer 8

If it is to be used for funding living cost rises for pensioners or to cover a future service liability for new members

Question 9

When spreading excess single large contributions, what are the three spread periods and amounts?

Answer 9

1. £500,000 to £999,999 = 2 accounting periods
2. £1mill to £1,999,999 = 3 accounting periods
3. £2mill + = 4 accounting periods