Commentary

D7.309 Payments in connection with employees

Corporate tax
Corporate tax | Commentary

D7.309 Payments in connection with employees

Corporate tax | Commentary

D7.309 Payments in connection with employees

Statutory redundancy payments and other employer's payments under the Employment Rights Act 1996 or the Employment Rights (Northern Ireland) Order by a company with investment business are allowable as management expenses1. Where the payment is made by the Secretary of State or by the Department for Employment and Learning (in Northern Ireland) and the employer reimburses them for the payments, they are deductible as if made by the employer2. Such payments made after the discontinuance of the investment business are treated as management expenses referable to the last accounting period in which the business was carried on3. Where the employer makes an addition to a redundancy payment after the discontinuance of the business, or part of it4, it is treated as a management expense (limited to three times the amount of the statutory payment) referable to the last accounting period in which the business was carried on5. Where the employee is employed partly in the employer's investment business and partly in other capacities, a just and reasonable apportionment must be made to determine how much of the deduction should be given against the investment business6.

Contributions by the employer to a

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