What does section 92 of the Corporation Tax Act 2009 allow companies to deduct?

Section 92 allows companies carrying on a trade to deduct levies paid under the Financial Services and Markets Act 2000 and costs awarded under FISMA costs rules when calculating trading profits for corporation tax. The deduction applies to the extent these amounts are not already allowable under normal trading profit rules.

Why is a specific statutory provision needed for FISMA levy deductions under United Kingdom corporation tax law?

Although most FISMA levies would qualify as allowable business expenses under standard rules, section 92 exists to cover exceptional situations where a levy might be blocked by a prohibitive rule. The explicit statutory deduction ensures that these regulatory costs are always deductible when calculating a company's trading profits for corporation tax.

Which companies can claim the FISMA levy deduction under section 92?

Section 92 applies to any company carrying on a trade, not just those authorised under FISMA 2000. This is broader than the predecessor legislation under ICTA section 76A. Even companies that are not authorised by the Financial Conduct Authority can claim the deduction if they are required to pay a qualifying levy.

What happens when a company receives a repayment of a FISMA levy?

When a company receives a repayment of a FISMA levy, section 104 of the Corporation Tax Act 2009 applies. This section brings the repayment into the company's trading profits for tax purposes, ensuring that the tax benefit of the original deduction is effectively reversed to the extent of the amount repaid.

Corporation Tax Act 2009 section 92

Levies etc. under FISMA 2000

Section 92 allows companies to deduct certain levies and costs awards arising under the Financial Services and Markets Act 2000 (FISMA 2000) when calculating their trading profits for corporation tax purposes.

Companies can deduct levies paid under FISMA 2000 and costs awarded under FISMA costs rules, to the extent these are not already allowable as deductions
Levies include payments required by the Financial Conduct Authority, levies under the Financial Services Compensation Scheme, payments required by the Financial Ombudsman Service, and certain other payments under FISMA 2000
Costs rules cover rules made under section 230 of FISMA 2000 and cost provisions in the standard terms fixed under Schedule 17 to FISMA 2000
The deduction is available to any company carrying on a trade, not just those that are authorised persons under FISMA 2000, and a related provision in section 104 deals with repayments of FISMA levies

Access full legislation.And much more.

By becoming a member, your team gets full access to Tax World research tools and source-backed tax resources.

Become a member