Income Tax (Trading and Other Income) Act 2005 section 865

Unpaid remuneration: non-trades and non-property businesses

Section 865 restricts the timing of tax deductions for employees' remuneration that has been charged in the accounts but not yet paid, in the context of income sources other than trades, professions, vocations or property businesses.

• Where employees' remuneration is charged in the accounts and would otherwise be deductible, it must be paid within 9 months of the end of the period of account to qualify for a deduction in that period.
• If the remuneration is paid after the 9-month deadline, the deduction is instead allowed in the period of account in which payment is actually made.
• This section applies only to non-trade and non-property business income; equivalent rules for trades, professions, vocations and property businesses are found in sections 36, 37 and 272.
• The supplementary provisions in section 37 (which define key terms and set out additional rules for unpaid remuneration) also apply for the purposes of this section.