Income Tax (Trading and Other Income) Act 2005 section 69

Payments for restrictive undertakings

Section 69 allows a trader to deduct payments made to employees in return for restrictive undertakings, even where such payments might otherwise be disallowed as capital expenditure or as not being wholly and exclusively for trade purposes.

• A deduction is available for payments to employees for restrictive undertakings that are taxed as earnings under section 225 of ITEPA 2003
• The payment must be made, or treated as made, by the person carrying on the trade, including where valuable consideration is given under section 226 of ITEPA 2003
• The deduction is claimed in the period of account in which the payment is actually made or treated as made
• No deduction is available in any other period, ensuring consistent timing across similar deduction rules in the legislation