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Use the Pension (defined benefit) template to deal with the tax treatment of a defined benefit (final salary) pension scheme. The accounting charge for a defined benefit scheme is made up of several components and does not equal the amount the employer actually contributes. Because relief is given only for contributions paid, the template reconciles the accounting cost to the contributions paid and makes the adjustment, applying the spreading rules where relevant.

Table of contents 

When should I use this template?

Use it where the company sponsors a defined benefit pension scheme and the accounts include a defined benefit pension cost (in profit and loss and in other comprehensive income).

Before you start — where the figures come from

The template is populated from the FRS 102 Retirement benefit obligation note — the defined benefit pension disclosure note prepared in the annual accounts or working papers. When that note has been added to the file (and is not hidden), Silverfin pulls the figures from it automatically and shows an on-screen note:

This template is populated from the [Retirement benefit obligation note]

The on-screen note includes a link to the disclosure note. If the note has not been added, the figures are entered manually in this template instead.

So, for a company that prepares its accounts in Silverfin, complete the FRS 102 retirement benefit obligation note first and the tax template picks the figures up. For a company whose accounts are prepared elsewhere, enter the figures directly here.

Background: accounting cost vs contributions paid

Under defined benefit accounting, the cost recognised comprises components such as the current service cost, the net interest cost, and the effect of plan introductions, changes, curtailments and settlements, with further amounts in other comprehensive income. None of these is deductible in its own right — relief is given only for the contributions actually paid by the employer.

What the template shows

Where the figures come from the FRS 102 note, the template mirrors the note's analysis across several linked tables:

  • P&L / OCI charge / (credit) — the current service cost, net interest cost, and plan introductions, changes, curtailments and settlements that make up the accounting charge.
  • Balance sheet — the net defined benefit asset or liability recognised.
  • Present value of the defined benefit obligation — the reconciliation of the obligation: opening balance, current service cost, interest cost, actuarial gains and losses, contributions from scheme participants, benefits paid, gains and losses on curtailments, and closing balance.
  • Fair value of plan assets — the reconciliation of scheme assets, which includes the key tax figure, Contributions from the employer, alongside interest income, return on plan assets, actuarial gains and losses, contributions from scheme participants, and benefits paid.

The template takes the contributions from the employer from the fair value of plan assets reconciliation and adjusts so that only the contributions paid are relieved, replacing the accounting defined benefit cost.

Spreading

As with defined contribution schemes, a pension spreading table is provided. Where a substantial increase in contributions must be spread, record the creation and utilisation of spread there — completing either creation or utilisation for each entry — so relief is given over the correct number of years. The spreading rules are set out in HMRC's Pensions Tax Manual PTM043400.

What flows through to the rest of Corporation Tax?

The adjustment replaces the accounting defined benefit cost with the contributions paid (subject to spreading), feeding the adjustment to profit for the relevant business type.

Frequently asked questions

Where does the template get its figures?

From the FRS 102 Retirement benefit obligation note in the accounts or working papers, when that note is present. If the note is not used, the figures are entered manually in this template.

Why is the accounting pension cost not deductible?

The defined benefit accounting cost includes non-cash components. Relief is given only for the contributions the employer actually pays into the scheme, taken from the fair value of plan assets reconciliation.

Does spreading apply to defined benefit schemes?

Yes — a substantial increase in contributions may have to be spread and relieved over more than one period. Record it in the pension spreading table, completing either creation or utilisation for each entry. See HMRC PTM043400.