Corporation Tax Act 2009

Miscellaneous

1301 Restriction of deductions for annual payments

(1) In calculating a company’s income from any source, no deduction is allowed for an annual payment which meets the conditions in subsections (2) to (6).

(2) The payment must be a payment charged to—

(a) income tax under Part 5 of ITTOIA 2005 otherwise than as relevant foreign income, or

(b) corporation tax under Chapter 7 of Part 10 (annual payments not otherwise charged).

(3) The payment must be made under a liability incurred for consideration in money or money’s worth all or any of which—

(a) consists of, or of the right to receive, a dividend, or

(b) is not required to be brought into account in calculating for corporation tax purposes the income of the company making the payment.

(4) The payment must not be a payment of income—

(a) which arises under a settlement made by one party to a marriage or civil partnership by way of provision for the other—

(i) after the dissolution or annulment of the marriage or civil partnership, or

(ii) while they are separated under an order of a court, or under a separation agreement, or if the separation is likely to be permanent, and

(b) which is payable to, or applicable for the benefit of, the other party.

(5) The payment must not be made to an individual under a liability incurred at any time in consideration of the individual surrendering, assigning or releasing an interest in settled property to or in favour of a person with a subsequent interest.

(6) The payment must not be a payment of an annuity granted in the ordinary course of a business of granting annuities.

(7) In subsection (2) “relevant foreign income” has the same meaning as in the Income Tax Acts (see section 989 of ITA 2007).

(8) In the application of this section to Scotland the reference in subsection (5) to settled property is to be read as a reference to property held in trust.

1302 Social security contributions

(1) No deduction is allowed for corporation tax purposes for any contribution paid by any person under—

(a) Part 1 of the Social Security Contributions and Benefits Act 1992 (c. 4), or

(b) Part 1 of the Social Security Contributions and Benefits (Northern Ireland) Act 1992 (c. 7).

(2) But this prohibition does not apply to an employer’s contribution.

(3) For this purpose “an employer’s contribution” means—

(a) a secondary Class 1 contribution,

(b) a Class 1A contribution, or

(c) a Class 1B contribution,

within the meaning of Part 1 of the Social Security Contributions and Benefits Act 1992 or of the Social Security Contributions and Benefits (Northern Ireland) Act 1992.

(4) Subsection (1) does not apply to the calculation of income from the holding of an office (in relation to which section 969 applies income tax principles, those including section 360A of ITEPA 2003 which corresponds to this section).

1303 Penalties, interest and VAT surcharges

(1) In calculating profits for any corporation tax purpose, no deduction is allowed for any penalty or interest mentioned in the first column of the following table.

(2) This is the table—

Penalty or interest	Description of tax, levy or duty
Penalty under any of sections 60 to 70 of VATA 1994	Value added tax
Interest under section 74 of VATA 1994
Penalty under any of sections 8 to 11 of FA 1994	Excise duties
Penalty under any of paragraphs 12 to 19 of Schedule 7 to FA 1994	Insurance premium tax
Interest under paragraph 21 of that Schedule
Penalty under any provision of Part 5 of Schedule 5 to FA 1996	Landfill tax
Interest under paragraph 26 or 27 of that Schedule
Penalty under any provision of Schedule 6 to FA 2000	Climate change levy
Interest under any of paragraphs 70, 81 to 85 and 109 of that Schedule
Penalty under any provision of Part 2 of FA 2001	Aggregates levy
Interest under any of paragraphs 5 to 9 of Schedule 5 to, paragraph 6 of Schedule 8 to and paragraph 5 of Schedule 10 to FA 2001
Penalty under section 25 or 26 of FA 2003	Customs, export and import duties
Penalty under any provision of Part 4 of FA 2003	Stamp duty land tax
Interest under any provision of that Part
Interest required to be paid by regulations made under section 71 of FA 2004 (construction industry)	Income tax

(3) In calculating profits for any corporation tax purpose, no deduction is allowed for any surcharge under section 59 of VATA 1994.

1304 Crime-related payments

(1) In calculating income from any source for corporation tax purposes, no deduction is allowed for any expenses to which subsection (4) or (5) applies.

(2) No deduction is allowed under section 1219 (expenses of management of a company’s investment business) for any expenses to which subsection (4) or (5) applies.

(3) Expenses to which subsection (4) or (5) applies are not to be brought into account under section 76 of ICTA (expenses of companies carrying on life assurance business) as expenses payable.

(4) This subsection applies to expenses incurred—

(a) in making a payment if the making of the payment constitutes a criminal offence, or

(b) in making a payment outside the United Kingdom if the making of a corresponding payment in any part of the United Kingdom would constitute a criminal offence in that part.

(5) This subsection applies to expenses incurred in making a payment induced by a demand which constitutes—

(a) the offence of blackmail under section 21 of the Theft Act 1968 (c. 60) (England and Wales),

(b) the offence of extortion (Scotland), or

(c) the offence of blackmail under section 20 of the Theft Act (Northern Ireland) 1969 (c. 16 (N.I.)) (Northern Ireland).

1305 Dividends and other distributions

(1) In the calculation of a company’s profits for corporation tax purposes, no deduction is allowed in respect of a dividend or other distribution.

(2) Subsection (1) is subject to any provision of the Corporation Tax Acts expressly authorising a deduction.

(3) In this section “profits” has the same meaning as in Part 2.