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HMRC internal manual

Inheritance Tax Manual

Dispositions allowable for income tax or conferring retirement benefits: deductions allowable for income tax

Under IHTA84/S12 (1) a disposition (IHTM04023) by any person is not a transfer of value (IHTM04024) if it

  • is allowable in computing that person’s profits or gains for income tax or corporation tax purposes, or
  • would be so allowable if those profits or gains were sufficient to be so computed.An example is a Christmas bonus paid to employees.

A person (IHTM04052) includes a company. So the subsection expressly covers a disposition by a company, etc which is deductible for corporation tax, including, for example

  • amounts deductible from rents taxable under Schedule A,
  • management expenses of an investment company, and
  • payments deductible from trading, etc profits.The subsection does not, however, apply to dispositions deductible against profits, etc which are not within the charge to United Kingdom income tax or corporation tax.