Annex 1: Minor changes in the law made by the Act: Change 18: Redundancy payments: legislate the practice of allowing voluntary payments made in connection with a cessation: section 79
This change legislates the practice of allowing as a deduction voluntary redundancy payments made in connection with the cessation of part of a trade.
Statement of Practice 11/81 extends the operation of section 90 of ICTA to payments in connection with the cessation of part of a trade. Section 79 of this Act gives effect to that practice in subsections (1) and (5).
If part of the trade continues, it would be possible to allow the deduction in the period of account in which the payment is made. But it is logical, and usually beneficial to the taxpayer, to make the deduction in the last period of account in which the part of the trade was carried on.
This change is in taxpayers' favour in principle. But it is expected to have no practical effect as it is in line with current practice.