Income Tax (Earnings and Pensions) Act 2003 section 554Z21

Relief for earmarking or security not followed by contribution or relevant benefit

Section 554Z21 provides a mechanism for claiming tax relief where funds have been earmarked or security has been provided in connection with an employer's retirement benefit undertaking, but no contribution is ultimately paid and no benefit is ultimately provided.

• Where an employer earmarks funds or provides security for a retirement benefit undertaking, and this is treated as a taxable step, relief may be available if the promised contribution is never paid or the benefit is never provided.
• The relief works by adapting the existing earmarking relief rules so that they refer specifically to the non-payment of the relevant contribution or the non-provision of the relevant benefit, rather than to the absence of a further relevant step more generally.
• The "relevant contribution" is the contribution that was to be paid under the employer's retirement benefit undertaking.
• A "relevant benefit" is a benefit that was to be provided out of the relevant contribution in connection with the retirement benefit arrangement.