Section 164 | Special rules for partnerships

(1)This section applies for the purpose of calculating the profits of a trade, profession or vocation carried on by a firm that is treated as making a deemed employment payment in connection with the trade, profession or vocation.

(2)The amount of the deduction allowed under section 163 is limited to the amount that reduces the profits of the firm for the tax year to nil.

(3)The expenses of the firm in connection with the relevant engagements for any period of account are limited to the total of—

(a)5% of the amount taken into account in step 1 of the calculation in section 54(1) of ITEPA 2003 (calculation of deemed employment payment), and

(b)the amount deductible in step 3 of that calculation.

(4)In this section “deemed employment payment” and “the relevant engagements” have the same meaning as in Chapter 8 of Part 2 of ITEPA 2003.