BIM42951 - Specific deductions: compensation & damages: general
Two main questions
The deduction of compensation or damages payments depends, broadly, on whether they were incurred:
- wholly and exclusively for trade purposes (see BIM37000 onwards for general guidance and BIM42955 on compensation/damages payments), and
- on revenue account (see BIM35000 onwards for the capital/revenue distinction and BIM42960 on compensation/damages payments)
Compensation for loss of office paid on retirement
If compensation for loss of office is paid on retirement, the guidance in EIM15042 should be considered. Guidance on compensation or damages payments in substantial cases may be obtained from CTISA (Technical).
There may also be other costs associated with making the compensation payment: