Finance Bill

Session 2012 - 13
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Other Bills before Parliament

Finance Bill

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
390

165
In section 561(2) (meaning of “investment life insurance contract”), in the
definition of “capital redemption policy”, for “section 431(2ZF) of ICTA”
substitute “section 56(3) of FA 2012”.
166
In section 563(6)(a) (increased non-trading credits for BLAGAB and EEA
taxed contracts), for “section 88(1) of FA 1989” substitute “section 102(3) of
5
FA 2012”.
167   (1)
Section 591 (conditions A to E mentioned in section 589(5)) is amended as
follows.
      (2)
In subsection (2)(a), for “life assurance business” substitute “long-term
business”.
10
      (3)
In subsection (2)(b), after “Sourcebook” insert “(within the meaning given by
section 139(4) of FA 2012)”.
168   (1)
Section 634 (insurance companies) is amended as follows.
      (2)
The existing text becomes subsection (1) of that section.
      (3)
In that subsection, omit paragraph (b) (together with the “or” before it).
15
      (4)
After that subsection insert—
“(2)
In the case of activities carried on by a company in the course of any
basic life assurance and general annuity business, provision
corresponding to that made by subsection (1) is made by section 88
of FA 2012 for the purpose of applying the I - E rules.”
20
169   (1)
Section 635 (creditor relationships of insurance companies: embedded
derivatives which are options) is amended as follows.
      (2)
In subsection (1)(a), for “life assurance business” substitute “basic life
assurance and general annuity business”.
      (3)
In subsection (2), for “This Part” substitute “For the purpose of applying the
25
I - E rules, this Part”.
170   (1)
Section 636 (insurance companies: modifications of Chapter 5 (continuity of
treatment on transfers within groups)) is amended as follows.
      (2)
In subsection (3), after the subsection (2B) which is treated as if it were
inserted in section 626 insert—
30
“(2C)
In subsection (2B) “qualifying overseas transfer” means so much of a
transfer of the whole or any part of the business of an overseas life
insurance company carried on through a permanent establishment
in the United Kingdom as takes place in accordance with an
authorisation granted outside the United Kingdom for the purposes
35
of Article 14 of the Council Directive of 5 November 2002 concerning
life assurance (No. 2002/83/EC).”
      (3)
In subsection (4), for the words from “the asset was within one of the
categories set out in section 440(4)(a), (d) and (e) of ICTA” to the end
substitute “, immediately before or after the transfer, the asset was held for
40
the purposes of a company’s long-term business (but, in the case of an
overseas life insurance company, ignoring assets which are not UK assets
(within the meaning of section 117 of FA 2012)).”

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
391

      (4)
In subsection (5)(a), for “the categories set out in section 440(4) of ICTA
(transfers of assets etc)” substitute “the applicable categories”.
      (5)
After subsection (5) insert—
“(5A)
For the purposes of subsection (5)(a) “the applicable categories”
means—
5
(a)
in the case of a UK life insurance company, the long-term
business categories or a category of assets which are not held
for the purposes of its long-term business, and
(b)
in the case of an overseas life insurance company, the UK
long-term business categories, a category of UK assets which
10
are not held for the purposes of its long-term business or a
category of assets which are held by it but which are not UK
assets.”
      (6)
After subsection (7) insert—
“(8)
For the purposes of this section—
15
(a)
“the long-term business categories” has the same meaning as
in section 116 of FA 2012, and “the UK long-term business
categories” and “UK assets” have the same meanings as in
section 117 of FA 2012, and
(b)
section 122 of FA 2012 applies as it applies for the purposes
20
of Chapter 8 of Part 2 of that Act.”
171
In section 699(3) (list of exceptions to general rule that Part 7 (derivative
contracts) has priority for corporation tax purposes)—
(a)
at the end of paragraph (a) insert “and”, and
(b)
omit paragraph (c) (together with the “and” before it).
25
172
In section 710 (derivative contracts: other definitions)—
(a)
in the definition of “capital redemption policy”, for “section 431(2ZF)
of ICTA” substitute “section 56(3) of FA 2012”,
(b)
in the definition of “contract of insurance”, for “section 431(2) of
ICTA” substitute “section 64 of FA 2012”, and
30
(c)
in the definition of “contract of long-term insurance”, for “section
431(2) of ICTA” substitute “section 64 of FA 2012”.
173
In section 746(2)(c) (“non-trading credits” and “non-trading debits”), for
“section 901(3)” substitute “section 901”.
174
In section 800(3) (excluded assets: introduction), omit paragraph (b)
35
(together with the “and” before it).
175
In section 806(3) (assets excluded from Part 8 (intangible fixed assets):
financial assets), after paragraph (c) (but before the “and” at the end of that
paragraph) insert—
“(ca)
assets so far as they are derived from, or are referable to,
40
contracts or policies of insurance or capital redemption
policies,”.
176
In section 810 (mutual trade or business), omit subsection (2).
177
In section 815 (election to exclude capital expenditure on software), omit
subsection (8).
45

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
392

178
In section 855(4) (further provision about regulations under section 854),
omit “or section 902”.
179
For section 901 substitute—
“901
Effect of application of the I - E basis: non-trading amounts
In the application of the I - E rules in relation to a company’s basic
5
life assurance and general annuity business, the provisions of this
Part need to be read with section 88 of FA 2012 (which provides for
the activities carried on by the company in the course of that business
not to constitute the whole or any part of a trade or of a property
business).”
10
180
Omit sections 902 (excluded assets) and 903 (elections to exclude capital
expenditure on computer software) and the italic heading before those
sections.
181
Omit section 904 (transfers of life assurance business: transfers of assets
treated as tax-neutral).
15
182
In section 906(3) (list of exceptions to general rule that Part 8 has priority for
corporation tax purposes), omit paragraph (b) (but not the “and” at the end
of that paragraph).
183
In section 931S(3) (company distributions: meaning of “small company”), in
the definition of “insurance company”, for “section 431 of ICTA” substitute
20
“section 65 of FA 2012”.
184
In section 931W (provisions which must be given priority over Part 9A),
omit subsection (3).
185
In section 985 (references to a deduction being allowed to a company), for
subsection (4) substitute—
25
“(4)
If—
(a)
the company is a company in relation to which the I - E rules
apply, and
(b)
the expenses are referable, in accordance with Chapter 4 of
Part 2 of FA 2012, to the company’s basic life assurance and
30
general annuity business,

the expenses are treated for the purposes of section 76 of that Act as
ordinary BLAGAB management expenses of the company.”
186
In section 999 (deduction for costs of setting up SAYE option scheme or
CSOP scheme), for subsection (5) substitute—
35
“(5)
If—
(a)
the company is a company in relation to which the I - E rules
apply, and
(b)
the expenses are referable, in accordance with Chapter 4 of
Part 2 of FA 2012, to the company’s basic life assurance and
40
general annuity business,

the expenses are treated for the purposes of section 76 of that Act as
ordinary BLAGAB management expenses of the company.”
187   (1)
Section 1000 (deduction for costs of setting up employee share ownership
trust) is amended as follows.
45

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
393

      (2)
In subsection (2), for “subsections (3) and (4)” substitute “subsection (3)”.
      (3)
Omit subsection (4).
188
In section 1013 (relief if shares acquired by employee or other person: how
relief is given), for subsection (4) substitute—
“(4)
If—
5
(a)
the employing company is a company in relation to which
the I - E rules apply, and
(b)
the relief is referable, in accordance with Chapter 4 of Part 2
of FA 2012, to the employing company’s basic life assurance
and general annuity business,
10

the amount of relief is treated for the purposes of section 76 of that
Act as ordinary BLAGAB management expenses of the company
referable to the accounting period.”
189
In section 1021 (relief if employee or other person obtains option to acquire
shares: how relief is given), for subsection (4) substitute—
15
“(4)
If—
(a)
the employing company is a company in relation to which
the I - E rules apply, and
(b)
the relief is referable, in accordance with Chapter 4 of Part 2
of FA 2012, to the employing company’s basic life assurance
20
and general annuity business,

the amount of relief is treated for the purposes of section 76 of that
Act as ordinary BLAGAB management expenses of the company
referable to the accounting period.”
190   (1)
Section 1080 (entitlement to relief: I minus E basis) is amended as follows.
25
      (2)
In subsection (1), for “under the I minus E basis in respect of its life assurance
business” substitute “in respect of its basic life assurance and general
annuity business in accordance with the I - E rules”.
      (3)
For subsection (2) substitute—
“(2)
If any additional deduction to which the company would otherwise
30
be entitled under section 1074 is referable, in accordance with
Chapter 4 of Part 2 of FA 2012, to the company’s basic life assurance
and general annuity business, it is to be treated for the purposes of
section 76 of that Act as a deemed BLAGAB management expense
for the accounting period in question.”
35
      (4)
Omit subsections (3) and (4).
191
In section 1083 (refunds of expenditure treated as income chargeable to tax),
omit subsections (4) and (5).
192
In section 1143(4) (overview of Part 14)—
(a)
in paragraph (a), for “life assurance business” substitute “basic life
40
assurance and general annuity business”, and
(b)
in paragraph (b), for ““life assurance company tax credits””
substitute ““BLAGAB tax credits””.
193   (1)
Section 1153 (land remediation tax credit: amount of a loss which is
“unrelieved”) is amended as follows.
45

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
394

      (2)
In subsection (3), for the words from “, as a result of section 432AB(3) of
ICTA,” to the end substitute “, as a result of section 87(3) of FA 2012, the loss
is treated for the purposes of section 76 of that Act as a deemed BLAGAB
management expense for the relevant accounting period.”
      (3)
In subsections (4) to (6), for “section 76(12) of ICTA” substitute “section 73 of
5
FA 2012”.
      (4)
In subsection (7), for paragraph (b) substitute—
“(b)
taken into account in calculating for the purposes of section
73 of FA 2012 the amount of adjusted BLAGAB management
expenses of the company for the relevant accounting period
10
as a result of—
(i)
the previous application of section 73 or 93 of FA
2012, or
(ii)
the carry forward to the relevant accounting period of
an amount under section 391 of this Act (surplus
15
deficit).”
      (5)
In subsection (8)—
(a)
in paragraph (b), for “section 432AA of ICTA” substitute “section 86
of FA 2012”, and
(b)
in the words after that paragraph, for “section 432AB(4) of ICTA”
20
substitute “section 87(4) of FA 2012”.
194   (1)
Section 1158 (restriction on losses carried forward where tax credit claimed)
is amended as follows.
      (2)
In subsection (3)—
(a)
for paragraph (a) substitute—
25
“(a)
as a result of section 87(3) of FA 2012, a company’s UK
property business loss is treated for the purposes of
section 76 of that Act as a deemed BLAGAB
management expense for the accounting period,” and
(b)
in paragraph (b), for “section 76(12) of ICTA” substitute “section 73
30
of FA 2012”.
      (3)
In subsection (4), for “section 76(12) of ICTA” substitute “section 73 of FA
2012”.
195
In the heading for Chapter 4 of Part 14, for “LIFE ASSURANCE BUSINESS”
substitute “BLAGAB”.
35
196
Omit section 1159 (limitation on relief under Chapter 2 of Part 14: insurance
companies) and the italic heading before that section.
197
In section 1160 (provision in respect of I minus E basis)—
(a)
for “The remaining provisions of this Chapter apply” substitute
“This Chapter applies”, and
40
(b)
for “under the I minus E basis in respect of its life assurance
business” substitute “in respect of its basic life assurance and general
annuity business in accordance with the I - E rules”.
198   (1)
Section 1161 (relief in respect of I minus E basis: expenses payable) is
amended as follows.
45

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
395

      (2)
In subsection (6), for “section 76(7) of ICTA” substitute “section 76 of FA
2012”.
      (3)
In subsection (7)(a), for “life assurance business” substitute “basic life
assurance and general annuity business”.
199   (1)
Section 1162 (additional relief) is amended as follows.
5
      (2)
In subsection (3), for the words from “as expenses payable” to the end
substitute “for the purposes of section 76 of FA 2012 as deemed BLAGAB
management expenses for the accounting period”.
      (3)
In subsection (4)(b), for the words from “which” to the end substitute “of the
expenditure which, for the purposes of section 76 of FA 2012, is not an
10
ordinary BLAGAB management expense of the company referable to the
accounting period as a result of the application of section 77(2)(b) of that
Act”.
200
In the italic heading before section 1164, for “Life assurance” substitute
“BLAGAB”.
15
201   (1)
Section 1164 (entitlement to tax credit) is amended as follows.
      (2)
In subsections (1) and (2)—
(a)
for “a life assurance company tax credit” substitute “a BLAGAB tax
credit”, and
(b)
for “qualifying life assurance business loss” substitute “qualifying
20
BLAGAB loss”.
      (3)
In subsections (3) and (4), for “a life assurance company tax credit” substitute
“a BLAGAB tax credit”.
202   (1)
Section 1165 (meaning of “qualifying life assurance business loss”) is
amended as follows.
25
      (2)
In subsection (1)—
(a)
in the opening words, for ““qualifying life assurance business loss””
substitute ““qualifying BLAGAB loss””, and
(b)
in paragraph (b), for “section 76(12) of ICTA (unrelieved expenses
carried forward)” substitute “section 73 of FA 2012 as excess
30
BLAGAB expenses”.
      (3)
In subsection (2), for “section 76(12) of ICTA” substitute “section 73 of FA
2012 as excess BLAGAB expenses”.
      (4)
In subsection (3), for paragraph (b) substitute—
“(b)
taken into account in calculating for the purposes of section
35
73 of FA 2012 the amount of adjusted BLAGAB management
expenses of the company for the relevant accounting period
as a result of—
(i)
the previous application of section 73 or 93 of FA
2012, or
40
(ii)
the carry forward to the relevant accounting period of
an amount under section 391 of this Act (surplus
deficit).”
      (5)
In subsection (4), for “qualifying life assurance business loss” substitute
“qualifying BLAGAB loss”.
45

Finance Bill
Schedule 16 — Part 2: minor and consequential amendments
Part 3 — Amendments of other Acts
396

      (6)
In the heading, for ““qualifying life assurance business loss”” substitute
““qualifying BLAGAB loss””.
203
In section 1166(1) (amount of tax credit)—
(a)
for “life assurance company tax credit” substitute “BLAGAB tax
credit”, and
5
(b)
for “qualifying life assurance business loss” substitute “qualifying
BLAGAB loss”.
204
In section 1167(1) and (3)(a) (payment of tax credit etc), for “a life assurance
company tax credit” substitute “a BLAGAB tax credit”.
205   (1)
Section 1168 (restriction on carrying forward expenses payable where tax
10
credit claimed) is amended as follows.
      (2)
In subsection (1), for “a life assurance company tax credit” substitute “a
BLAGAB tax credit”.
      (3)
In subsection (2)—
(a)
for “section 76 of ICTA” substitute “section 73 of FA 2012”,
15
(b)
for “subsection (12) of that section” substitute “that section as excess
BLAGAB expenses”, and
(c)
for “Step 7 in subsection (7) of that section” substitute “step 5 in
section 76 of FA 2012”.
      (4)
In subsection (3), for “qualifying life assurance business loss” substitute
20
“qualifying BLAGAB loss”.
206
In section 1169(2) (artificially inflated claims for relief or tax credit)—
(a)
in paragraph (c), for “life assurance business” substitute “basic life
assurance and general annuity business”, and
(b)
in paragraph (d), for “life assurance company tax credits” substitute
25
“BLAGAB tax credits”.
207
After section 1223 insert—
“1223A
  Exception for basic life assurance and general annuity business
(1)
Sections 1219 to 1223 do not apply in relation to an accounting period
of an insurance company with investment business so far as the
30
business consists of basic life assurance and general annuity
business.
(2)
See instead the rules set out in Chapter 3 of Part 2 of FA 2012.”
208   (1)
Section 1251 (car hire) is amended as follows.
      (2)
In subsection (3), after “subsection (2)” insert “(including as applied by
35
section 82(4) of FA 2012)”.
      (3)
In subsection (5)—
(a)
at the end of paragraph (a) insert “or”, and
(b)
omit paragraph (c) (together with the “or” before that paragraph).
209
In section 1288(4) (unpaid remuneration)—
40
(a)
in paragraph (a), after “business),” insert “including as applied by
section 82 of FA 2012”, and
(b)
omit paragraph (b) (together with the “and” before it).