Income Tax (Trading and Other Income) Act 2005 section 82

Contributions to local enterprise organisations or urban regeneration companies

Section 82 allows a tax deduction for contributions made by a trader to local enterprise organisations or urban regeneration companies, but restricts or claws back the deduction where the trader or a connected person receives a disqualifying benefit.

• A trader who makes contributions (in cash or in kind) to a local enterprise organisation or an urban regeneration company may claim a deduction for those expenses, even where the general rules would not otherwise permit one
• If the trader or a connected person receives or becomes entitled to a disqualifying benefit in connection with the contribution, the deduction is reduced by the value of that benefit
• If a disqualifying benefit is received after the deduction has already been claimed, the value of the benefit is treated as a taxable trading receipt on the date it is received
• If the trader has permanently ceased trading before the benefit is received, the value of the benefit is treated as a post-cessation receipt and taxed accordingly