Income Tax (Trading and Other Income) Act 2005 section 39

Making of "employee benefit contributions"

Section 39 defines what constitutes an "employee benefit contribution" and an "employee benefit scheme" for the purposes of restricting tax deductions under section 38.

• An employee benefit contribution arises when any act or omission causes property to be held or used under an employee benefit scheme, or increases the value of property so held (or reduces liabilities under the scheme).
• An employee benefit scheme is any trust, scheme or arrangement set up for the benefit of current or former employees, or persons linked with those employees.
• The definition of "persons linked" with employees follows the rules in section 554Z1 of the Income Tax (Earnings and Pensions) Act 2003, treating references to "A" as references to a current or former employee of the employer.
• The definition of employee benefit scheme also extends to certain disguised remuneration arrangements under sections 554A and 554AA of ITEPA 2003, and to any other arrangement connected directly or indirectly with such arrangements.