Taxation (International and Other Provisions) Act 2010 section 424A

Unpaid employees' remuneration

Section 424A adjusts the calculation of a group's profit before tax, where an alternative calculation election is in effect, by excluding unpaid employees' remuneration from the period in which it is recognised and instead including it in the period in which it is actually paid.

• Where a group has made an interest allowance (alternative calculation) election, any employees' remuneration recognised as an expense in the group's financial statements but not actually paid within nine months after the end of the period of account is excluded from the group's profit before tax for that period.
• If that excluded remuneration is subsequently paid in a later period of account for which an alternative calculation election is also in effect, it is brought into the group's profit before tax for that later period instead.
• This adjustment aligns the group-EBITDA calculation more closely with UK corporation tax rules, which similarly restrict deductions for remuneration that remains unpaid beyond nine months after the end of the relevant period.
• The supplementary provisions in section 1289 of the Corporation Tax Act 2009 (which clarify how unpaid remuneration rules operate, including the meaning of "paid") apply equally for the purposes of this section.