Finance Act 2004

197Spreading of reliefU.K.

(1)This section applies where—

(a)contributions are paid by an employer under a registered pension scheme in two consecutive chargeable periods (“the previous chargeable period” and “the current chargeable period”), and

(b)the amount of the contributions paid in the current chargeable period otherwise than for an excepted purpose (“CCCP”) exceeds 210% of the amount of the contributions paid in the previous chargeable period (“CPCP”).

(2)Relief under [F1the relieving provisions] is to be given in respect of so much of CCCP as exceeds 110% of CPCP (“the amount of the relevant excess contributions”) in accordance with subsections (4) and (5).

(3)But subsection (2)—

(a)does not apply if the amount of the relevant excess contributions is less than £500,000, and

(b)has effect subject to section 198 (cessation of business).

(4)A fraction of the whole of the amount of the relevant excess contributions is to be treated for the purposes of [F2the relieving provisions] as if it had been paid in the chargeable period, or in each of the two or three chargeable periods, immediately after the current chargeable period (leaving only the remainder to be treated as paid in the current chargeable period).

(5)The following table specifies (by reference to the amount of the relevant excess contributions)—

(a)the fraction of the whole of the amount of the relevant excess contributions which is to be treated as paid in the chargeable period, or in each of the two or three chargeable periods, immediately after the current chargeable period, and

(b)the chargeable period or periods in which it is to be treated as paid.

(6)Subsection (7) specifies for the purposes of subsection (1) when contributions paid by the employer in the current chargeable period are paid for an excepted purpose.

(7)They are paid for an excepted purpose if paid with a view to funding—

(a)an increase in the amount of pensions paid to pensioner members of the pension scheme to reflect increases in the cost of living, or

(b)benefits which may accrue under the pension scheme to or in respect of individuals who become members of the pension scheme in the current chargeable period as a result of future service as employees of the employer.

(8)Where the previous chargeable period and the current chargeable period are not of equal length, this section has effect as if CPCP were the amount it would otherwise be as adjusted by being multiplied by the appropriate factor.

(9)The appropriate factor is—

[F3(9A)In this section “the relieving provisions” means the provisions mentioned in subsections (2) to (4) of section 196 (relief for employers in respect of contributions paid), as they have effect under that section.]

(10)In this section “chargeable period” means—

(a)in a case where the contributions are deducted in computing profits to be charged under [F4Part 2 of ITTOIA 2005] [F5or Part 3 of CTA 2009 (trading income),] a period of account, and

(b)in a case where relief in respect of the contributions is given under [F6[F7section 76 of FA 2012] (expenses of insurance companies) or Chapter 2 of Part 16 of CTA 2009 (expenses of management: companies with investment business), an accounting period.]