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Pension contributions: True or false?

By Mark McLaughlin, November 2020

Mark McLaughlin looks at a case on how pension contributions should be ‘paid’ for tax purposes, where HMRC’s arguments and the tribunal’s decision seemed contrary to HMRC’s guidance.   

There are many different payment methods for goods and services. When it comes to individuals making contributions to registered pension schemes, how must payments be made to qualify for tax relief?  

Cash or assets? 

HM Revenue and Customs (HMRC) considers that ‘paid’ in this context generally means that contributions to the scheme must be of a monetary amount (e.g. cheque, direct debit, bank transfer) (see HMRC’s Pensions Tax Manual at PTM042100).  

However, HMRC’s guidance also states: ‘…it is possible for a member to agree to pay a monetary contribution and then to give effect to the cash

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