Corporation Tax Act 2009 section 69

Payments for restrictive undertakings

Section 69 allows a company to deduct payments made to employees in return for restrictive undertakings when calculating its trading profits.

• A deduction is available for payments made to employees in return for undertakings that restrict their conduct or activities, such as non-compete agreements
• The payment must be one that is taxed as earnings in the employee's hands under the employment income rules
• Without this specific provision, such payments might not be deductible because they could be regarded as capital expenditure or might fail the "wholly and exclusively" test
• The deduction is claimed in the accounting period in which the payment is actually made or treated as made — not when the undertaking is agreed