Corporation Tax Act 2010 section 996A

Deductions from total profits for sporting testimonial payments and associated payments

Section 996A provides corporation tax relief for companies that control sporting testimonials and make payments to sportspersons from the proceeds raised.

• A company controlling a sporting testimonial event may deduct qualifying payments — including income tax, employee's and employer's national insurance contributions — from its total profits when calculating corporation tax.
• The deduction applies in the accounting period the payment is made, but can be carried back to earlier periods if a claim is submitted within two years of the end of that accounting period.
• Where deductions relate to payments made across multiple accounting periods, they must be applied in chronological order starting with the earliest, and each period's deduction is capped at the amount that reduces taxable total profits to nil.
• The deduction is only available to the extent the amounts are not already deductible elsewhere in computing the company's total profits.