Income Tax (Earnings and Pensions) Act 2003 section 556

Deductible payments made outside the time limits allowed

Section 556 sets out the time window within which a former employee must make a deductible payment in order to claim a deduction under section 555, and explains what happens if the payment falls outside that window.

• A deduction under section 555 is only available if the payment falls within a specific "run-off period" after the employment has ended.
• No deduction is allowed if the payment is made on or before the last day the former employee held the employment.
• No deduction is allowed if the payment is made after the end of the sixth tax year following the tax year in which the employment ceased.
• If the payment was made while the person was still employed (on or before the last day), the deduction may instead be available under section 346, which deals with employee liabilities during employment.