Income Tax (Trading and Other Income) Act 2005 section 753A

Interest on unpaid relevant contributions

Section 753A exempts from income tax any interest that an employer pays to the Pensions Regulator in connection with late or unpaid workplace pension contributions.

• Interest paid under a compliance notice or unpaid contributions notice in respect of overdue pension contributions is exempt from income tax
• A compliance notice is issued by the Pensions Regulator under section 35 of the Pensions Act 2008 to require an employer to put right a failure to comply with pension duties
• An unpaid contributions notice is issued under section 37 of the Pensions Act 2008 requiring payment of outstanding employer pension contributions
• The exemption applies equally under the corresponding Northern Ireland legislation, the Pensions (No.2) Act (Northern Ireland) 2008