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The Finance Bill 2008 will include provisions confirming that the only
amounts a company is allowed to deduct in respect of pension costs are the
pension contributions paid to an approved occupational pension scheme in the
period.
This will be a retrospective measure, effective for accounting periods
beginning on or after 1 April 2004 and ending on or before 5 April 2006, and
reinstates a provision that had been in earlier legislation but which was
deleted from the legislation covering this period. It confirms that only
cash contributions to pension schemes are allowable deductions for tax
purposes, not the expenses shown in the profit and loss account.
Our view
This change
‘confirms’ the law for the period immediately before the new pensions
tax regime became effective. It purports to do so by removing a relief
to which taxpayers might reasonably have considered themselves to be
entitled (though it would be fair to say that many taxpayers did not in
fact claim that relief). Outside the field of tax avoidance – which
does not seem to be an issue here – it is very rare for retrospective
changes that are disadvantageous for taxpayers to be proposed. This may
be a matter that promotes discussion if it is actively considered in
Committee. |
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