# Income and Corporation Taxes Act 1988, Paragraph 23

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

(1) In a case where—
(a) paragraph 21 above applies to a scheme, and
(b) method A (specified in paragraph 13 above) is employed for the purposes of the scheme,
the scheme must contain provisions which comply with this paragraph and which apply as regards each profit period to which the scheme relates.
(2) The scheme must ensure that no payments are made under it by reference to a given profit period if the percentage mentioned in paragraph 13(1) above exceeds the permitted percentage.
(3) The scheme must ensure that the permitted percentage is a percentage found by—
(a) taking the pay paid to employees in respect of employment in the relevant year in the employment unit to which the other scheme mentioned in paragraph 22(1)(a) above relates or (if there are two or more other schemes) the aggregate of the pay paid to employees in respect of employment in the relevant year in the employment units to which the other schemes relate;
(b) taking the profit-related pay paid to employees in respect of employment in the relevant year in the employment unit to which the other scheme mentioned in paragraph 22(1)(a) above relates or (if there are two or more other schemes) the aggregate of the profit-related pay paid to employees in respect of employment in the relevant year in the employment units to which the other schemes relate;
(c) taking the pay paid to employees in respect of employment in the relevant year in the employment unit to which the scheme mentioned in paragraph 21 above relates;
(d) taking the fraction whose denominator is equal to the number of whole pounds found under paragraph (a) above and whose numerator is equal to the number of whole pounds found under paragraph (b) above;
(e) multiplying the amount found under paragraph (c) above by the fraction found under paragraph (d) above;
(f) taking the profits for the relevant year of the undertaking mentioned in paragraph 21 above;
(g) expressing the amount found under paragraph (e) above as a percentage of the amount found under paragraph (f) above;
(h) taking the percentage found under paragraph (g) above as the permitted percentage.
(4) The scheme must ensure that the relevant year is a period of 12 months identified in the scheme and ending at a time within the period of two years immediately preceding the given profit period.

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Source: https://www.legislation.gov.uk/ukpga/1988/1/schedule/8/paragraph/23 (the official version)
Page: https://openlegislation.uk/income-and-corporation-taxes-act-1988/schedule-8/paragraph-23
Contains public sector information licensed under the Open Government Licence v3.0. Source: legislation.gov.uk, The National Archives.