Commentary on Sections Example 3 £150(Pe) – £50(E) = £100 Section 224: Payments to non-approved personal pension arrangements
898.This section provides that an employer’s payments under non-approved personal pension arrangements made by the employee are treated as earnings. It derives from section 648 of ICTA.
899.It contrasts with section 308 of this Act, which exempts from income tax as earnings an employer’s contributions under approved personal pension arrangements made by the employee.
900.Subsection (1) sets out that the payments are treated as earnings from the employment. In view of the content of Chapter 2 of Part 2, it is unnecessary to add (as in section 648 of ICTA) that the payments are so treated “for all the purposes of the Income Tax Acts”. The year of charge is made explicit. See Note 7 in Annex 2.
901.Subsection (2) provides that the employer’s payments are not treated as earnings under this section to the extent they are otherwise chargeable to income tax. For example, if contributions are so made that only a charge by virtue of section 62 of this Act (earnings) otherwise applies, section 224 will apply to the extent, if any, that section 62 does not apply.
902.Conversely, if a charge would only arise otherwise by virtue of section 203 of this Act (cash equivalent of benefit treated as earnings), but the payments are wholly or partly exempted from that charge by section 307 of this Act (death or retirement benefit provision), a charge under this section will apply on the amount so exempt.
903.Subsection (3) provides relevant definitions by cross-reference to section 630(1) of ICTA.
904.The Board of Inland Revenue may approve a personal pension scheme. The provisions for approval of a pension scheme are set out in section 631 of ICTA.