In making the calculation ignore so much of those expenses as is deductible
under other relevant rules (see section 78(2)).
If the company is an overseas life insurance company, see also section 96.
If the expenses calculated in accordance with step 1 include acquisition
expenses for the purposes of section 79, reduce the amount given by step 1 in
accordance with the rules in that section (which, in the typical case, provide for
six-sevenths of the adjusted amount of those expenses to be disallowed for the
accounting period and relieved instead as deemed BLAGAB management
expenses for the next six accounting periods).
Calculate the total amount of any deemed BLAGAB management expenses for
the accounting period (see section 78(3)).
For this purpose ignore any amounts that have already been included in step 1.
Find the basic amount by adding together the amount given by the calculation
required by step 1 (adjusted, where relevant, in accordance with step 2) and the
amount given by the calculation required by step 3.
Adjust the basic amount by deducting from it any expenses reversed in the
accounting period (see section 78(4)) and any BLAGAB trade loss relieved for
the accounting period (see section 78(5)).
Add together any amounts carried forward as expenses from the previous
accounting period to the accounting period as a result of section 73 or 93 to give
the carried-forward amount.
Add the carried-forward amount to the basic amount or, as the case may be,
the basic amount adjusted in accordance with step 4.
The resulting amount is the amount of adjusted BLAGAB management
expenses of the company for the accounting period.
Section 76: meaning of “ordinary BLAGAB management expenses” etc
This section explains for the purposes of section 76 what is meant by the
“ordinary BLAGAB management expenses of the company referable to the
Amounts are “ordinary BLAGAB management expenses” of the company if—
they are, in accordance with generally accepted accounting practice,
debited in accounts drawn up by the company for a period of account
(but see subsection (3)),
they are expenses of management of the company’s long-term business
that are referable, in accordance with Chapter 4, to its basic life
assurance and general annuity business, and
they are not excluded amounts (see subsections (4) to (7)).
In a case where acquisition expenses (within the meaning of section 80)
incurred in the accounting period fall to be debited in successive accounts
drawn up for successive periods of account, those expenses are treated instead
as if they were all debited in the accounts drawn up for the first of those periods
The following are “excluded amounts”—
amounts of a capital nature,
profit commissions and profit participations (however described),
a liability of the company to pay an amount of commission or other
expenses so far as exceeding the amount which it could reasonably be
expected to pay if sections 68 and 69 were not applicable,
non-commercial amounts payable by the company,
amounts payable in connection with a policy or contract to a
policyholder or annuitant under the policy or contract or to any other
person entitled to receive benefits under the policy or contract.
For the purposes of subsection (4)(f) expenses or other amounts are “non-
commercial amounts” payable by the company so far as the company’s
purpose in incurring the liability to make the payment is not a business or other
commercial purpose of the company.
Amounts payable as mentioned in paragraph (g) of subsection (4) include—
amounts payable to any person acting on behalf of a person within that
amounts payable to the personal representatives of a deceased person
who was (or acted on behalf of a person who was) within that
Amounts payable as mentioned in subsection (4)(g) do not include amounts
payable to an insurance company which is a policyholder under the policy.
In the case of ordinary BLAGAB management expenses in respect of a period
of account which coincides with or falls wholly in an accounting period of the
company, all of those expenses are “referable to” the accounting period.
In the case of ordinary BLAGAB management expenses in respect of any other
those expenses are to be apportioned to the accounting period of the
company in accordance with section 1172 of CTA 2010, and
the apportioned amount of those expenses is “referable to” the
Section 76: meaning of other expressions
This section explains for the purposes of section 76 what is meant by—
“deemed BLAGAB management expenses for the accounting period”,
“expenses reversed in the accounting period”, and
“BLAGAB trade loss relieved for the accounting period”.
An expense is deductible under another “relevant rule” if—
it is deductible as a result of section 92(3),
it is deductible in calculating, for corporation tax purposes, the profits
of a property business, or
it is deductible as a result of section 272 of CTA 2009 in calculating
income from the letting of rights to work minerals in the United
An amount is a “deemed BLAGAB management expense for the accounting
period” if it is treated as such for the purposes of section 76 as a result of—
section 79 or paragraph 33(2) of Schedule 17 (spreading of acquisition
section 83 (general annuity business),
section 87(3) (losses from property businesses where land held for
purposes of long-term business),
section 88(6) (excess of debits in respect of intangible fixed assets),
section 89(2) (excess of miscellaneous losses),
paragraph 16(1) of Schedule 7 to FA 1991 (transitional relief for old
general annuity contracts),
section 256(2)(a) of CAA 2001 (allowances in respect of plant or machinery
consisting of management asset),
section 391(3) of CTA 2009 (loan relationships: carry forward of surplus to
section 1080(2) of CTA 2009 (additional relief for expenditure on research
section 1162 of CTA 2009 (additional relief for remediation of
contaminated or derelict land), or
section 783(6), 785(4) or 791(6) of CTA 2010 (manufactured dividends).
“Expenses reversed in the accounting period” means the total amount of the
which were relieved in any previous accounting period in accordance
with step 1 (as read with step 2) or step 3 of section 76, but
which are subsequently reversed in the accounting period.
A “BLAGAB trade loss relieved for the accounting period” means so much of
a BLAGAB trade loss of the company for the accounting period for which relief
section 37 of CTA 2010 (relief for trade losses against total income), as
applied by section 123, or
Chapter 4 of Part 5 of that Act (group relief), as applied by section 125.
Spreading of acquisition expenses
This section applies if the ordinary BLAGAB management expenses of an
insurance company referable to an accounting period for the purposes of
section 76 include acquisition expenses (as defined by section 80) incurred in
In the case of the acquisition expenses—
a reduction is to be made at step 2 in section 76 so as to secure that only
one-seventh of the adjusted amount of those expenses counts as
ordinary BLAGAB management expenses of the company referable to
the accounting period, and
the remainder of that adjusted amount is to be relieved as deemed
BLAGAB management expenses for succeeding accounting periods in
accordance with the following provisions.
References in this section to the adjusted amount of the acquisition expenses
the amount of those expenses calculated as mentioned in step 1 of
section 76 (and see, in particular, section 77(3)), less
any amount of re-insurance commission or any repayment or refund
(in whole or in part) that forms part of an I - E receipt of the company
for the accounting period as a result of section 92.
The remainder of the adjusted amount of the acquisition expenses is relieved
One-seventh of the adjusted amount of the acquisition expenses is treated for
the purposes of section 76 as a deemed BLAGAB management expense for
each succeeding accounting period.
But, if a succeeding accounting period is less than a year, the fraction of that
amount to be relieved for that period is proportionately reduced.
The reliefs operate until the whole of the adjusted amount of the acquisition
expenses has been used up (and, accordingly, the rules in subsections (5) and
(6) have effect subject to this subsection).
The treatment of any part of the adjusted amount of the acquisition expenses
as a deemed BLAGAB management expense for an accounting period (“the
period concerned”) as set out in subsections (5) to (7) is subject to the following
If expenses are reversed in the period concerned or any preceding accounting
period, any acquisition expenses included in those expenses are not to count as
deemed BLAGAB management expenses for the period concerned.
Section 79: meaning of “acquisition expenses”
This section explains for the purposes of section 79 what is meant by
The following are “acquisition expenses”—
commissions (however described) other than commissions for persons
who collect premiums from house to house,
any other expenses payable solely for the purpose of the acquisition of
so much of any other expenses payable partly for that purpose, and
partly for other purposes, as are properly attributable to the acquisition
The exclusion from paragraph (a) of subsection (2) of commissions for persons
who collect premiums from house to house does not prevent their counting as
expenses under another paragraph of that subsection.
For the purposes of that subsection “the acquisition of business” includes—
the securing of the payment of increased or additional premiums in
respect of a policy of insurance issued in respect of an insurance
the securing of the payment of increased or additional consideration in
respect of an annuity contract already made.