Corporation Tax Act 2009 section 868

Delayed payment of pension contributions

Section 868 ensures that where a company accounts for pension contributions in one period but does not actually pay them until a later period, the tax deduction is deferred until the contributions are physically paid.

• If a company recognises a pension contribution expense in its accounts but has not paid it by the end of that period of account, the deduction is delayed until actual payment is made.
• Pension contributions covered by this rule include employer contributions to registered pension schemes, deemed contributions paid to scheme trustees or managers, and expenditure on benefits under employer-financed retirement benefits schemes.
• The contributions may only be brought into account for the purposes of the loan relationships rules at the point they are paid, not when they are accrued.
• Where an accounting debit relates partly to delayed pension contributions and partly to other matters, any necessary adjustment must be apportioned on a just and reasonable basis.