787J Allowance to employer.

(1) For the purposes of this section—

(a) a reference to a “chargeable period” shall be construed as a reference to a “chargeable period or its basis period” (within the meaning of section 321), and

(b) in relation to an employer whose chargeable period is a year of assessment, “basis period” means the period on the profits or gains of which income tax for that year of assessment is to be finally computed for the purposes of Case I or II of Schedule D in respect of the trade, profession or vocation of the employer.

(2) Subject to subsection (3), any sum paid by an employer by way of contribution under a PRSA contract of an employee shall for the purposes of Case I or II of Schedule D and of sections 83 and 707(4) be allowed to be deducted as an expense, or expense of management, incurred in the chargeable period in which the sum is paid but no other sum shall for those purposes be allowed to be deducted as an expense, or expense of management, in respect of the making, or any provision for the making, of any contributions under the PRSA contract.

(3) The amount of an employer’s contributions which may be deducted under subsection (2) shall not exceed the amount contributed by that employer to Personal Retirement Savings Accounts in respect of employees in a trade or undertaking in respect of the profits of which the employer is assessable to income tax or corporation tax, as the case may be.