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Stakeholder pension contributions could they be a benefit in kind?

Individuals can contribute to a Stakeholder pension from 6 April 2001. Almost anyone who is resident in the UK is eligible to contribute up to £3,600 per year.

All companies who are not exempt must provide access to a stakeholder pension for thier employees. A family comapny may wish to extend this access to non working shareholders or relatives of employees and directors who have no or little income of ther own. If they do so would this constitute a benfit in kind for the relative-employee? This si assuming that the company does not make any contributions to the stakeholder scheme on behalf of the non-emloyed members.

Is the company permitted to make contributions to a stakeholder scheme for non-employed members, perhaps ex-employees on a career break, or spouses of directors? If it does woudl these nonemployees be taxed on those contributions?
Rebecca Cave

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By neileg
17th Oct 2000 10:02

I'm neither a tax nor pensions expert, but...
Supposing a company did contribute to a non employee stakeholder pension, then I don't see how this would be a trading expense, and therefore I couldn't see this being a valid deduction for corporation tax.
A benefit in kind arises where an individual gains a benefit in connection with their employment. Thus for people who are not employed, there could be no BIK. However, relatives of employees would create a BIK on the employee to whom they are related. In a 'family' company there'll be plenty of relationships to trigger this off.
If a shareholder received such a benefit, this might be treated as a distribution.
So, without any knowledge of the specific tax regime surrounding stakeholder pensions, I would anticpate a number of problems with doing as you suggest.

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