Corporation Tax Act 2009 section 40B

Professionals in practice: incidental income from an office or employment

Section 40B allows certain small payments received by a partner in a professional firm for holding an office or employment to be treated as a trading receipt of the firm rather than as the individual's employment income, provided specific conditions are met.

• Applies where a partner in a professional firm receives a payment in their capacity as an employee or office-holder (but not as a company director)
• The time spent on the office or employment must be insubstantial compared to the time spent on the profession, and the role must be related to the profession
• The payment must be insubstantial compared to the individual's share of the firm's total receipts, and the individual must be required by the partnership agreement to account for it to the firm
• When all conditions are satisfied, the payment is treated for corporation tax purposes as a receipt of the trade carried on by the firm