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HMRC internal manual

Banking Manual

Bank compensation restriction: introduction: background to bank compensation restriction

The bank compensation restriction rules in CTA09/S133A – M deny banks and building societies corporation tax relief for compensation payments related to misconduct issues.  The restriction can apply to any company where they are making compensation payments that relate to the conduct of a banking company.

It applies to relevant compensation expenditure arising on or after 8 July 2015. Where the accounting period straddles this date the expenses should be apportioned between the pre- and post-commencement periods on a just and reasonable basis. This is explained in more detail at BKM209100.