# Income and Corporation Taxes Act 1988, Paragraph 13

Extent: E+W+S+N.I.

(1) Method A is that the distributable pool is equal to a,fixed percentage of the profits of the employment unit in the profit period.
(1A) That percentage must be a fixed percentage specified in the scheme and, if the scheme relates to more than one period, must be the same for each period.
(2) That percentage must be such that, on the assumption as to profits mentioned in sub-paragraph (3)below, it will produce a distributable pool equal to not less than 5per cent. of the standard pay of the employment unit.
(3) The assumption referred to in sub-paragraph (2)above is that the profits in the profit period are the same as those in a base year specified in the scheme; and that base year must be a period of 12months ending at a time within the period of two years immediately preceding the profit period, or the first of the profit periods, to which the scheme relates.
(4) Notwithstanding sub-paragraph (1) above, a scheme employing method A may include provision for disregarding profits in the profit period so far as they exceed 160 per cent. (or such greater percentage as may be specified in the scheme) of—
(a) if the profit period is the first or only period to which the scheme relates, the profits for a base year specified in the scheme;
(b) in any other case, the profits for the previous profit period.
(5) Notwithstanding sub-paragraph (1) above, a scheme employing method A may include provision to the effect that there shall be no distributable pool if the profits in the profit period are less than an amount specified in, or ascertainable by reference to, the scheme; but that amount must not exceed the profits for a base year specified in the scheme.
(6) The base year referred to in sub-paragraph (4)(a) and sub-paragraph (5) above must be a period of 12 months ending at a time within the period of two years immediately preceding the profit period, or the first of the profit period, to which the scheme relates
(7) Any provision included in a scheme by virtue of sub-paragraph (4) or (5) above may take effect either from the scheme’s first profit period or from any later profit determined in accordance with the scheme.

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Source: https://www.legislation.gov.uk/ukpga/1988/1/schedule/8/paragraph/13 (the official version)
Page: https://openlegislation.uk/income-and-corporation-taxes-act-1988/schedule-8/paragraph-13
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.