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189 | Relief under net pay arrangements |
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(1) | This section applies where an individual is entitled to be given relief in |
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accordance with this section in respect of the payment of a contribution under |
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(2) | The amount of the contribution is to be allowed to be deducted by the |
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sponsoring employer from the employment income from the individual’s |
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employment with the employer for the tax year in which the payment is made. |
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(3) | A deduction may be made only once in respect of the same contribution. |
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(4) | A claim for excess relief may be made if— |
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(a) | the amount of the contributions paid by an individual under one or |
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more relevant net pay pension schemes in a tax year exceeds the |
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employment income from the individual’s employment or |
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employments with the sponsoring employer or employers for the tax |
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(b) | it is not possible for the sponsoring employer or employers for any |
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other reason to deduct the whole amount of the contribution from the |
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individual’s employment income. |
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(5) | A net pay pension scheme is a relevant net pay pension scheme if the members |
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of the pension scheme entitled to be given relief in accordance with this section |
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in respect of the payment of contributions by them under the pension scheme |
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(6) | On the making of the claim for excess relief the amount of the excess may be |
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deducted from the total income of the individual for the tax year. |
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(7) | Where, after relief is given to an individual in accordance with this section for |
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a tax year, an assessment, alteration of an assessment or other adjustment of the |
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individual’s liability to tax is made, any appropriate consequential |
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adjustments are to be made in relief given to the individual in accordance with |
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(8) | Where relief is given to an individual in accordance with this section for a tax |
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year in respect of a contribution, relief is not to be given in respect of it under |
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any other provision of the Income Tax Acts. |
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190 | Relief on making of claim |
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(1) | Where an individual is entitled to be given relief in accordance with this section |
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in respect of the payment of a contribution, on the making of a claim the |
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amount of the contribution may be deducted from the total income of the |
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individual for the tax year in which the payment is made. |
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(2) | Where, after relief is given to an individual in accordance with this section for |
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a tax year, an assessment, alteration of an assessment or other adjustment of the |
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individual’s liability to tax is made, any appropriate consequential |
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adjustments are to be made in relief given to the individual in accordance with |
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(3) | Where relief is given to an individual in accordance with this section for a tax |
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year in respect of a contribution, relief is not to be given— |
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(a) | in respect of the contribution under any other provision of the Income |
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(b) | (in the case of a contribution under an annuity contract) in respect of |
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any other premium or consideration for an annuity under the same |
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191 | Transfer of certain shares to be treated as payment of contribution |
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(1) | For the purposes of sections 184 to 190 (relief for contributions) references to |
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contributions paid by an individual include contributions made in the form of |
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the transfer by the individual of eligible shares in a company within the |
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(2) | For the purposes of those sections the amount of a contribution made by way |
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of a transfer of shares is the market value of the shares at the date of the |
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(3) | “Eligible shares”, in relation to a contribution made by an individual, means |
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(a) | which the individual has exercised a right to acquire in accordance with |
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the provisions of an SAYE option scheme, or |
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(b) | which have been appropriated to the individual in accordance with the |
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provisions of a share incentive plan. |
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(4) | “The permitted period”— |
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(a) | in relation to shares which the individual has exercised a right to |
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acquire in accordance with the provisions of an SAYE option scheme, |
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is the period of 90 days following the exercise of that right, and |
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(b) | in relation to shares which have been appropriated to the individual in |
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accordance with the provisions of a share incentive plan, is the period |
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of 90 days following the date when the individual directed the trustees |
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of the share incentive plan to transfer the ownership of the shares to the |
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| “SAYE option scheme” has the same meaning as in the SAYE code (see |
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section 516 of ITEPA 2003 (approved SAYE option schemes)), and |
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| “share incentive plan” has the same meaning as in the SIP code (see |
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section 488 of ITEPA 2003 (approved share incentive plans)). |
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192 | Relief for employers in respect of contributions paid |
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(1) | This section makes provision about an employer’s entitlement to relief in |
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respect of contributions paid by the employer under a registered pension |
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scheme in respect of any individual. |
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(2) | For the purposes of Case I or II of Schedule D— |
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(a) | the contributions are to be treated as not being payments of a capital |
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nature to the extent that they otherwise would be, and |
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(b) | if they are allowed to be deducted in computing the amount of the |
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profits of the employer, they are deductible in computing the amount |
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of the profits for the period of account in which they are paid. |
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(3) | For the purposes of section 75 of ICTA (expenses of management: companies |
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with investment business), the contributions— |
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(a) | are to be treated as being expenses of management to the extent that |
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they otherwise would not be, and |
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(b) | are referable to the accounting period in which they are paid. |
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(4) | For the purposes of section 76 of ICTA (expenses of insurance companies), the |
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(a) | are to be brought into account at Step 1 in subsection (7) of that section |
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to the extent that they otherwise would not be, and |
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(b) | are referable to the accounting period in which they are paid. |
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(5) | The references in this section to contributions include minimum payments |
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(a) | section 8 of the Pension Schemes Act 1993 (c. 48), or |
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(b) | section 4 of the Pension Schemes (Northern Ireland) Act 1993 (c. 49), |
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| other than any part recovered from a member of the pension scheme under |
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regulations made under subsection (3) of either of those sections. |
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(6) | This section is subject to sections 193 and 194 (spreading of relief) (and to |
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transitional provision contained in Part 4 of Schedule 34). |
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(1) | This section applies where— |
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(a) | contributions are paid by an employer under a registered pension |
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scheme in two consecutive chargeable periods (“the previous |
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chargeable period” and “the current chargeable period”), and |
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(b) | the amount of the contributions paid in the current chargeable period |
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otherwise than for an excepted purpose (“CCCP”) exceeds 210% of the |
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amount of the contributions paid in the previous chargeable period |
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(2) | Relief under section 192 (relief for employers in respect of contributions paid) |
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is to be given in respect of so much of CCCP as exceeds 110% of CPCP (“the |
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amount of the relevant excess contributions”) in accordance with subsections |
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(a) | does not apply if the amount of the relevant excess contributions is less |
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(b) | has effect subject to section 194 (cessation of business). |
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(4) | A fraction of the whole of the amount of the relevant excess contributions is to |
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be treated for the purposes of section 192 as if it had been paid in the chargeable |
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period, or in each of the two or three chargeable periods, immediately after the |
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current chargeable period (leaving only the remainder to be treated as paid in |
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the current chargeable period). |
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(5) | The following table specifies (by reference to the amount of the relevant excess |
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(a) | the fraction of the whole of the amount of the relevant excess |
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contributions which is to be treated as paid in the chargeable period, or |
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in each of the two or three chargeable periods, immediately after the |
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current chargeable period, and |
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(b) | the chargeable period or periods in which it is to be treated as paid. |
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| | | | | | | | | | | £500,000 or more but less than |
| One-half of the whole of the amount |
| | | | | of the relevant excess contributions |
| | | | | is to be treated as paid in the |
| | 5 | | | chargeable period immediately after |
| | | | | the current chargeable period |
| | | | £1,000,000 or more but less than |
| One-third of the whole of the |
| | | | | amount of the relevant excess |
| | | | | contributions is to be treated as paid |
| | 10 | | | in each of the two chargeable |
| | | | | periods immediately after the |
| | | | | current chargeable period |
| | | | | One-quarter of the whole of the |
| | | | | amount of the relevant excess |
| | 15 | | | contributions is to be treated as paid |
| | | | | in each of the three chargeable |
| | | | | periods immediately after the |
| | | | | current chargeable period |
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(6) | Subsection (7) specifies for the purposes of subsection (1) when contributions |
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paid by the employer in the current chargeable period are paid for an excepted |
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(7) | They are paid for an excepted purpose if paid with a view to funding— |
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(a) | an increase in the amount of pensions paid to pensioner members of the |
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pension scheme to reflect increases in the cost of living, or |
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(b) | benefits which may accrue under the pension scheme to or in respect of |
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individuals who become members of the pension scheme in the current |
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chargeable period as a result of future service as employees of the |
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(8) | Where the previous chargeable period and the current chargeable period are |
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not of equal length, this section has effect as if CPCP were the amount it would |
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otherwise be as adjusted by being multiplied by the appropriate factor. |
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(9) | The appropriate factor is—![equation: over[times[char[D],char[C],char[C],char[P]],times[char[D],char[P],char[C],char[P]]]](missing.gif) |
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| DCCP is the number of days in the current chargeable period, and |
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| DPCP is the number of days in the previous chargeable period. |
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(10) | In this section “chargeable period” means— |
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(a) | in a case where the contributions are deducted in computing profits to |
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be charged under Case I or II of Schedule D, a period of account, and |
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(b) | in a case where relief in respect of the contributions is given under |
| 40 |
section 75 or 76 of ICTA (expenses of management: companies with |
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investment business and expenses of insurance companies), an |
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