Income Tax (Trading and Other Income) Act 2005 section 870

Crime-related payments: non-trades and non-property businesses

Section 870 prevents deductions for expenses where the payment itself constitutes a criminal offence, or where the payment was made in response to blackmail or extortion, when calculating non-trade and non-property business income for income tax purposes.

• No deduction is allowed for expenses incurred in making a payment that constitutes a criminal offence, whether made in the UK or abroad (if it would be criminal in the UK)
• No deduction is allowed for payments made in response to blackmail (England, Wales and Northern Ireland) or extortion (Scotland)
• This section applies only to income that is not from a trade, profession, vocation or property business
• Equivalent rules for trades, professions and vocations are in section 55, and for property businesses in sections 272 and 272ZA