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Autoenrolment contributions tax relief

Year end liability allowable for Corporation Tax?

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The general rule for pension contributions is that they are allowed for tax when paid.  So in theory that means that the balance on the Pensions Liability account needs to be split between Employee contributions (a simple liability, no issue) and Employer contributions (which then represents unpaid pension contributions).

When I prepare accounts for companies, my instinct is that these unpaid contributions at the year end in respect of auto-enrolment schemes should be allowable for Corporation Tax, though, because they are a statutory obligation of the company, not a discretionary payment which could be cancelled.

I looked through the HMRC Manuals, and could only find reference to the 'tax relief when paid' option.  I just wondered if anyone had come across this and formed a different view, and what their supporting argument was.  In most cases this will not be a material figure, but its an irritation to have to adjust the Comps each year for b/fwd and c/fwd creditors.

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By Bobbo
11th Dec 2020 16:46

I understand the distinction you are trying to make in regarding AE contributions as a statutory obligation, but surely a non-AE contribution is (generally) a contractual obligation rather than a 'discretionary payment which could be cancelled' as you put it?

If an employer was contributing more than the AE minimum to the scheme would you start apportioning the unpaid employer contribution at year end between the 'statutory obligation' and the additional amount over the minimum???

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Replying to Wanderer:
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By Paul Crowley
11th Dec 2020 17:35

Agree Euan
Once past first year then opening and closing balances likely to be similar anyway

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Replying to Paul Crowley:
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By Tax Dragon
12th Dec 2020 07:58

How much longer does it take to get it right?

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Psycho
By Wilson Philips
11th Dec 2020 21:04

I don’t see that it matters whether there is a statutory obligation or not. The legislation blocking relief until paid makes no mention of such obligation. Not paid, no relief. Easy.

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By Tax Dragon
12th Dec 2020 07:57

Should you be accruing for what you seem to think are future voluntary payments anyway? (Though, as others have done, I question your thinking. Is payment of salary voluntary too?)

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Replying to Tax Dragon:
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By practice for sale
14th Dec 2020 10:56

Not sure your point. Who mentioned voluntary? Its mandatory, because its a statutory obligation, hence my question.

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By tom123
12th Dec 2020 09:16

Just one of those stupid tax rules that one has to learn to live with.

Or get your pension upload in time to get collected

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