Corporation Tax Act 2009 section 1240

Payments in respect of employment wholly in employer's business

Section 1240 deals with how certain payments to employees of investment businesses are treated as management expenses for corporation tax purposes, and sets limits on the deductions available.

• Where an employee works wholly in the employer's investment business, payments made in respect of that employment are treated as expenses of management.
• For approved contractual payments, the deductible amount is capped at the amount the employee would have received had a statutory redundancy payment been payable.
• If the payment relates to an accounting period that begins after the investment business has permanently ceased, it is treated as falling into the last accounting period in which the business was still operating.
• The section applies specifically to investment businesses and links these employment-related payments into the broader management expenses regime under Chapter 2 of Part 16.