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HMRC internal manual

Company Taxation Manual

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HM Revenue & Customs
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Corporation Tax: management expenses: redundancy payments

ICTA88/S579 (3) and ICTA88/S90 (1)(b)

Under ICTA88/S579 (3) statutory redundancy payments made under the legislation specified in ICTA88/S580 are allowable as expenses of management. This legislation is:

  • The Employment Rights Act 1996 or its predecessor, the Employment Protection (Consolidation) Act 1978, and
  • in Northern Ireland, the Contracts of Employment and Redundancy Payments Act (Northern Ireland) 1965.

The 1978 and 1996 Acts incorporate provisions contained originally in the 1965 Redundancy Payments Act.

Under ICTA88/S90 (1)(b) additional payments up to a maximum of three times the amount of the statutory redundancy payment will be eligible for relief as expenses of management.

Where an investment company (or a ‘company with investment business’ for periods starting on or after 1 April 2004) claims redundancy payments as management expenses, you should follow the guidance at BIM46600 onwards.