The following Pensions practice note produced in partnership with Patrick Ford of Squire Patton Boggs provides comprehensive and up to date legal information covering:
THIS PRACTICE NOTE APPLIES IN RELATION TO DEFINED BENEFIT OCCUPATIONAL PENSION SCHEMES
Sections 75 and 75A of the Pensions Act 1995 (PA 1995) are designed to ensure that defined benefit occupational pension schemes are adequately funded when they are wound up or when the sponsoring employer is liquidated. In a multi-employer scheme, a debt is also imposed on any employer that ceases to employ any active members at a time when another employer still employs at least one active member (known as an ‘employment cessation event’), even though neither the scheme nor the departing employer are being wound up.
For further information in respect of when section 75 debts are triggered and how they are calculated, see Practice Notes:
How to deal with a section 75 debt—an introduction
When is a section 75 debt triggered?, and
Calculating a section 75 debt
Where a section 75 debt is to be paid, the key tax consideration is whether the section 75 debt will be tax deductible for the payer. In other words, will the payment be a deductible expense that reduces the payer’s taxable profits?
A section 75 debt is treated for tax purposes as a deemed contribution to an occupational scheme. This means that the usual rules that apply to
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