BIM47135 - Specific deductions: staffing costs:
relevant & potential emoluments
‘Relevant emoluments' and ‘potential emoluments' are
defined in FA89/S43 (10) and (11) respectively. They are intended
to encompass items an employer might claim in respect of
emoluments, and which would be properly deductible in computing
profits on normal accounting principles, that is:
- Emoluments allocated to particular offices
or employments.
- Emoluments allocated, not to a particular
office or employment, but generally in respect of all or a
particular group of offices or employments. An example of this is a
global sum to be paid as a bonus to all, or some class of,
employees but the precise allocation of which to individual
employees had not, at the accounting date, been decided.
- Payments made by an employer to a third
party to enable that third party to make payments to, or provide
benefits for, employees which will constitute emoluments in the
employees' hands at some future date, perhaps, on the occasion of
the happening of some contingency.
In this context payments made by a company to the trustees of an
employee benefit trust to provide benefits in the form of cash or
shares to employees of the company will often not constitute
potential emoluments. But any case in which it appears that such a
trust is being used by a company largely to channel emoluments to
employees so as to obtain a deduction for the payments when
charged, whilst deferring the receipt of the emoluments in the
hands of the employee, should be referred to CT&VAT
(Technical).
- Amounts reserved in accounts, by way of an
accounting provision, in respect of emoluments which, although for
that period of account, do not become payable to the employee until
the happening of some future event. An example of this is a bonus
due for a particular period of account which only becomes payable
on condition that the employee is still working for the employer
in, say, five years' time.
