The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004

Investment and insurance companies: computation

42.—(1) Section 44 of the Finance Act 1989(1) is amended as follows.

(2) For subsection (1) (no deduction for late paid remuneration) substitute—

“(1) For the purposes of corporation tax, in calculating for a period of account the profits of a company with investment business, an amount charged in the accounts in respect of employees' remuneration shall not be deductible under section 75 of the Taxes Act 1988 as expenses of management unless the remuneration is paid before the end of the period of 9 months immediately following the end of the period of account.”.

(3) In subsection (5) (profits of trade calculated before end of the period of 9 months) for “the profits of the trade” substitute “the profits of the company”.

(4) For subsection (7) (application to the company carrying on life assurance business) substitute—

“(7) This section shall apply in calculating the profits of a company in relation to which section 76 of the Taxes Act 1988 applies (companies carrying on life assurance business) as it applies in calculating the profits of a company with investment business; and in any such case—

(a)any reference in this section to an amount being deductible under section 75 of the Taxes Act 1988 as expenses of management shall be taken as a reference to an amount being brought into account under section 76 of that Act as expenses payable and references to a deduction shall be construed accordingly;

(b)subsection (4) above shall have effect subject to section 86 below, and

(c)in construing section 86 below the remuneration shall be treated as expenses payable for that period which fall to be included at Step 1 in section 76(7) of the Taxes Act 1988.”.

(5) In subsection (8) (definitions)—

(a)before the definition of “employee” insert—

““company with investment business” has the same meaning as in Part 4 of the Taxes Act 1988 (see section 130 of that Act),”; and

(b)omit the definition of “investment company”.

(6) The side note to the section accordingly becomes “Companies with investment business and insurance companies: computation”.