Income Tax (Earnings and Pensions) Act 2003 section 308

Exemption of contributions to approved personal pension arrangements

Section 308 provides that employer contributions to a registered pension scheme on behalf of an employee are exempt from income tax as earnings.

• When an employer pays contributions into a registered pension scheme for an employee, those contributions do not give rise to an income tax liability for the employee.
• The exemption applies specifically to contributions made under a registered pension scheme, meaning the scheme must meet the requirements for registration with HMRC.
• The contributions are treated as exempt from tax as earnings, so they are not added to the employee's taxable pay.
• This exemption encourages pension saving by ensuring employees are not penalised through income tax when their employer contributes to their pension.