Finance Act 2008

Amendment of section 81A (restriction of deductions for employee benefit contributions) of Principal Act.

25.— (1) Section 81A of the Principal Act is amended—

(a) in subsection (1)(a) by substituting the following for the definition of “qualifying expenses”:

“ ‘ qualifying expenses ’, in relation to a scheme manager and an employee benefit scheme, does not include expenses that, if incurred by the employer, would not be allowed as a deduction in calculating the profits or gains of the employer to be charged to tax under Case I or II of Schedule D but, subject to the foregoing, includes any expenses of a scheme manager (apart from the provision of benefits to employees of the employer) incurred in the operation of the employee benefit scheme;

‘ scheme manager ’ means a person who administers an employee benefit scheme or any person to whom an employer pays money or transfers an asset and such person is entitled or required, under the provisions of an employee benefit scheme to retain or use the money or asset for or in connection with the provision of benefits to employees of the employer.”,

(b) in subsection (1)(b) by substituting the following for sub-paragraph (i):

“(i) an employee benefit contribution is made if, as a result of any act or omission—

(I) any assets are held, or may be used, under an employee benefit scheme, or

(II) there is an increase in the total value of assets that are so held or may be so used (or a reduction in any liabilities under an employee benefit scheme),”,

(c) in subsection (3)(b)(i) by substituting “a scheme manager” for “the third party” in the first place where it occurs, and by substituting “the scheme manager” for “the third party” in the second place where it occurs,

(d) in subsection (3)(b)(ii) by substituting “the scheme manager” for “the third party”,

(e) in subsection (4)(b)(i) by substituting “a scheme manager” for “the third party” in the first place where it occurs, and by substituting “the scheme manager” for “the third party” in the second place where it occurs,

(f) in subsection (4)(b)(ii) by substituting “the scheme manager” for “the third party”, and

(g) in subsection (5) by substituting the following for paragraph (b):

“(b) The amount provided shall be taken for the purposes of this section to be the total of—

(i) (I) the amount, if any, expended on the asset by a scheme manager, or

(II) where the asset consists of new shares in a company connected (within the meaning of section 10) with the employer, or rights in respect of such shares, issued by the connected company, the market value of those shares or rights, as the case may be, at the time of the transfer,

and

(ii) in a case in which the asset was transferred to a scheme manager by the employer, the amount of the deduction that would be allowed as referred to in subsection (2) in respect of the transfer.”.

(2) This section applies as respects employee benefit contributions made on or after 31 January 2008.