Employee remuneration

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

Employee remuneration
Accrued remuneration
Employee benefit contributions
Travel costs
Fines and penalties
Training costs

This guidance covers some common types of business expenditure relating to employees which may be disallowable for tax purposes. Some of these are disallowable under specific statutory rules and some are disallowable on general principles. For guidance on general principles, see the Trading income ― general principles guidance note.

Accrued remuneration

Salaries and wages are usually deducted in the period in which the wages are actually paid. However, an additional rule provides that tax relief is given for accrued wages as long as the wages are actually paid within nine months of the end of the accounting period. Where remuneration is paid on or after 1 April 2017, and also constitutes employee benefit contributions, then the rules for deduction follow the provisions discussed in the section below on ‘Employee benefit contributions’.

CTA 2009, s 1288

If the accrued wages are not paid within nine months of the end of the period:

•the accrued amount is added back, and
•relief is given in the period in which the wages are actually paid

Remuneration is most commonly accrued in the form of bonuses. Creditors should always be reviewed for any amounts of accrued remuneration.

Often, the tax computation is prepared in advance of the ‘nine-month’ date. In this circumstance, where remuneration is accrued but unpaid when the calculation is made, it must be assumed to be unpaid at the nine-month date. The position may be amended subsequently if the amount is paid over before the nine-month date.

CTA 2009, s 1289(3)

If the tax computation is prepared before the nine-month date, and there are any amounts of remuneration which are unpaid which were accrued at the accounting date, then the tax consequences should be considered as soon as