Taxes Consolidation Act 1997 section 81A

Restriction of deductions for employee benefit contributions

Section 81A restricts the timing of tax deductions for employer contributions to Employee Benefit Schemes, ensuring deductions are only allowed when matching taxable benefits are provided to employees.

• Contributions to an Employee Benefit Scheme (EBS) are only deductible to the extent that qualifying benefits (taxable in the hands of employees) or qualifying expenses are provided or paid within the chargeable period or within nine months after its end.
• Where a deduction is initially disallowed, it may be carried forward and allowed in a later chargeable period when qualifying benefits are eventually provided to employees out of the contributions.
• Where the qualifying benefit is a transfer of an asset, the deductible amount is limited to the lower of the cost or market value of the asset and the amount on which the employee is actually chargeable to income tax.
• The restrictions do not apply to deductions for trading or professional costs, contributions to accident benefit schemes, approved employee share schemes (Part 17), or approved pension arrangements (Part 30).