»Ê¹ÚÌåÓýapp

S42 Income Tax (Trading and Other Income) Act 2005, S1294 Corporation Tax Act 2009

Whether qualifying benefits provided during a particular period were paid ‘out of� an employer’s contribution (which would otherwise be deductible in computing the employer’s taxable profits for the period) is relevant in deciding to what extent the deduction is disallowed for a period and may be allowable for a later period.

Whether qualifying expenses paid by the EBT trustees during a particular period were paid ‘out of� an employer’s contribution (which would otherwise be deductible in computing the employer’s taxable profits for the period) is only relevant in deciding to what extent the deduction is disallowed for a period.

Payments ’out of� contributions

»Ê¹ÚÌåÓýappre are special deeming rules in determining whether qualifying benefits have been provided or qualifying expenses have been met ‘out ofâ€� the contribution concerned, other receipts and expenses of the EBT are ignored.

For contributions made or to be made on or after 1 April 2017 (CT) or 6 April 2017 (IT), no deduction is allowed for a period of account which starts more than 5 years after the end of the period of account in which the contribution is made. »Ê¹ÚÌåÓýapprefore it will be necessary to track the use of such contributions to determine the extent to which deductions are allowable.

Example

Accounting period ended 31/12/2012

Date	-	Amount
01/02/2012	Initial amount settled to create EBT (capital expenditure)	£ 1,000
02/02/2012	Company contribution to EBT	£500,000
01/06/2012	EBT incurs non-qualifying expenditure	(£ 5,000)
01/09/2012	EBT receives bank interest	£ 10,000
01/12/2012	EBT pays qualifying benefits to employees	(£500,000)

»Ê¹ÚÌåÓýapp qualifying benefits paid to employees on 1/12/2012 are deemed to have been paid ‘out ofâ€� the £500,000 contributed to the EBT on 2/2/2012.

»Ê¹ÚÌåÓýapp other income received by the trustees (£11,000) and the non-qualifying expenses (£5,000) are ignored for this purpose.