Trusts 4 U?

THE HOUSE OF Lords published its judgment in MacDonald v Dextra Accessories Ltd on 7 July. The judgment gives the final clarification of the corporation tax treatment of company contributions to employee benefit trusts under the law as it stood up to November 2002. The purpose of this article is to summarise the current position and to discuss the choices now facing companies who either have made or are considering making contributions to employee benefit trusts.
The Dextra case is relevant to any claims for corporation tax deductions in respect of contributions (or accruals of contributions) to an employee benefit trust made in respect of financial periods ending prior to 27 November 2002. For contributions or accruals made in later financial periods the question of tax deductibility is governed by FA 2003 Schedule 24 as well as the now amended FA 1989...