Corporation Tax - staff bonuses?

[onlinetravelservices]

Hi all,

We operate a staff bonus scheme which offers our staff a lump sum based on year end profits. Are these deductible from profits for tax purposes?

[Deliberator]

Hi all,

We operate a staff bonus scheme which offers our staff a lump sum based on year end profits. Are these deductible from profits for tax purposes?

Your accountant will be able to answer that rightfully

[Zeno]

Hi all,

We operate a staff bonus scheme which offers our staff a lump sum based on year end profits. Are these deductible from profits for tax purposes?

Yes provided they are paid within 9 months of your year end.

[Tom Egerton]

And provided there was a legal obligation in place at the year end, in other words not decided upon after the year end. You should also accrue the employer's national insurance contributions on the relevant bonuses.

[Maslins]

And (token bit of useless geeky trivia) the accrued NI is deductible regardless of whether the bonus (and hence related NI) is paid within 9 months or not.

[spencergate]

And provided there was a legal obligation in place at the year end, in other words not decided upon after the year end. You should also accrue the employer's national insurance contributions on the relevant bonuses.


Can I clarify please... do these rules apply equally to staff bonuses as well as directors bonuses ?

[jim_price]

They can be deducted provided there is a legal obligation (perhaps from employment contracts, or company meeting minutes) to pay them, or a constructive obligation (i.e. they have perenially been paid so will be again) to pay them. The actual level of bonus doesn't need to determined before the year end.