HM Revenue & Customs have finally published updated guidance on the position of tax relief relating to employer contributions into pensions, confirming the 'wholly & exclusively' rule will only be applied in limited circumstances.
In the original guidance published for A-Day in the Business Income Manual (BIM) HMRC stated contributions would only qualify for tax relief if they were “wholly and exclusively” for the purpose of business. However, the rules have been described as both vague and confusing for both IFAs, the industry and even for local inspectors of taxes who have to make the final decision on whether contributions meet the new rules. As a result, some parts of the industry were reporting cases of local inspectors reverting back to the pre-A-Day maximum funding rules, which led HMRC to state in September...
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