Corporation Tax Act 2009 section 1236

Payroll deduction schemes

Section 1236 allows companies with investment business to treat the costs of operating a payroll giving (payroll deduction) scheme as deductible expenses of management.

• Applies to companies with investment business that deduct income tax from payments to individuals under PAYE and operate an approved payroll deduction scheme
• Amounts withheld from employees' pay must be passed to an approved agent under an approved scheme (as defined in section 714 of ITEPA 2003)
• Payments made by the employer to the approved agent to cover the agent's expenses of running the scheme qualify as expenses of management
• The qualifying expenses include both costs the agent has already incurred and costs the agent will incur in carrying out its functions under the scheme