Taxes Consolidation Act 1997 section 996

Treatment for tax purposes of certain unpaid remuneration

Section 996 deals with the PAYE treatment of remuneration that has been claimed as a deductible expense in a trade or profession but remains unpaid at the end of the relevant accounting period.

• Where remuneration is deducted as an expense in computing profits but has not actually been paid to the employee, it is deemed to have been paid on the relevant date and PAYE must be operated on it accordingly.
• The unpaid remuneration is treated as accruing evenly from day to day over the period of accrual, which runs from the later of the start of the accounting period or the start of the employment to the earlier of the end of the accounting period or the end of the employment.
• For accounting periods of 12 months or less, the relevant date is the last day of the period; for periods of account exceeding 12 months, the relevant dates are each 31 December falling within the period and the last day of the period.
• The section does not apply if the remuneration is actually paid within six months of the deemed payment date, or within 18 months of the first day of a period of account that exceeds 12 months, whichever is later.