Income Tax (Trading and Other Income) Act 2005 section 37

Unpaid remuneration: supplementary

Section 37 provides supplementary definitions and rules that support the main unpaid remuneration provision in section 36, clarifying what counts as remuneration, when it is treated as paid, and how to handle tax returns filed before the nine-month deadline expires.

• Amounts provisioned in the accounts that are expected to become employees' remuneration (such as conditional incentive payments) are treated as remuneration charged in the accounts for the purposes of the section 36 restriction.
• It does not matter whether a remuneration charge relates to specific named employments or to employments in general — the unpaid remuneration rules apply equally in either case.
• If trade profits are calculated before the nine-month period ends and remuneration is still unpaid at that point, it must be assumed it will remain unpaid; however, if it is subsequently paid within the nine months, the calculation and tax return may be revised accordingly.
• Remuneration is regarded as "paid" when it is treated as received by the employee under the earnings rules in ITEPA 2003 (or would be so treated if the income were not exempt), and the terms "employee" and "remuneration" are broadly defined to include office holders and all amounts treated as earnings.