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103 | Rules for determining policyholders’ share of I - E profit |
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(1) | This section determines for the purposes of section 102 the policyholders’ share |
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of the I - E profit of an insurance company for an accounting period. |
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(2) | If the basic life assurance and general annuity business of the company carried |
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on by the company in the accounting period is mutual business, the |
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policyholders’ share of the I - E profit is the whole of that profit. |
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(3) | In any other case, the policyholders’ share of the I - E profit is determined as |
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(4) | The first step is to calculate whether the company has a BLAGAB trade profit |
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for the accounting period, and, if so, its amount. |
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(5) | If the company does not have a BLAGAB trade profit for that period, the |
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policyholders’ share of the I - E profit is the whole of that profit. |
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(a) | the company has a BLAGAB trade profit for that period, and |
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(b) | the adjusted amount of the BLAGAB trade profit is less than the |
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amount of the I - E profit for that period, |
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| the difference between those amounts represents the policyholders’ share of |
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(a) | the company has a BLAGAB trade profit for that period, and |
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(b) | the adjusted amount of the BLAGAB trade profit is equal to or more |
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than the amount of the I - E profit, |
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| there is no policyholders’ share of the I - E profit. |
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(8) | References to the adjusted amount of the BLAGAB trade profit are to be read |
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in accordance with section 104. |
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104 | Meaning of “the adjusted amount” |
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(1) | This section explains for the purposes of section 103 what is meant by the |
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adjusted amount of the BLAGAB trade profit. |
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(2) | The following adjustments are to be made to the amount of the BLAGAB trade |
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(3) | If relief is available under section 124 (carry forward of BLAGAB trade losses |
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against subsequent profits), the BLAGAB trade profit is to be reduced as |
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mentioned in that section. |
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(4) | If, as a result of relief given under that section, the BLAGAB trade profit is |
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reduced to nil, then the adjusted amount of the BLAGAB trade profit for the |
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purposes of section 103 is nil. |
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(a) | the BLAGAB trade profit is not reduced to nil as a result of relief given |
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under section 124 or no relief is available under that section, and |
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(b) | in the accounting period BLAGAB non-taxable distributions are |
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receivable by the company, |
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| the BLAGAB trade profit is reduced or further reduced (but not below nil) by |
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subtracting from it an amount equal to the shareholders’ share of those |
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(6) | The BLAGAB trade profit as so reduced or further reduced is the adjusted |
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BLAGAB trade profit for the purposes of section 103. |
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105 | Meaning of “BLAGAB non-taxable distributions” and “shareholders’ share” |
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(1) | This section explains for the purposes of section 104 what is meant by— |
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“BLAGAB non-taxable distributions”, and |
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“the shareholders’ share” of BLAGAB non-taxable distributions. |
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(2) | Non-taxable distributions are “BLAGAB” non-taxable distributions if they are |
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referable, in accordance with Chapter 7, to the company’s basic life assurance |
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and general annuity business. |
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(3) | The “shareholders’ share” of the BLAGAB non-taxable distributions receivable |
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by the company in the accounting period is the relevant proportion of those |
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(4) | The relevant proportion is—
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BTP is the amount of the BLAGAB trade profit of the company for the |
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BNTD is the amount of the BLAGAB non-taxable distributions receivable |
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by the company in the accounting period, and |
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I is the total of the amounts given by the calculations required by steps 1 |
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to 3 in section 73 (I - E basis: income referable to BLAGAB) in relation |
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to the company’s basic life assurance and general annuity business for |
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(5) | If BTP exceeds BNTD + I, the shareholders’ share of the BLAGAB non-taxable |
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distributions receivable by the company in the accounting period is the whole |
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Policyholder tax and calculation of BLAGAB trade profit or loss |
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106 | Deduction for current policyholder tax |
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(1) | This section applies for the purpose of calculating the BLAGAB trade profit or |
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loss for an accounting period of any basic life assurance and general annuity |
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business carried on by an insurance company in a case where the company has |
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an I - E profit for that period. |
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(2) | In calculating the profit or loss for the accounting period, a deduction is |
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allowed for an amount equal to the amount of corporation tax charged at the |
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policyholders’ rate of tax on the policyholders’ share of the company’s I - E |
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107 | Expenses or receipts for deferred policyholder tax |
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(1) | This section applies for the purpose of calculating the BLAGAB trade profit or |
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loss for a period of account of any basic life assurance and general annuity |
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business carried on by an insurance company. |
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(2) | In calculating the profit or loss, an amount is brought into account that is equal |
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(a) | the closing deferred policyholder tax balance for the period of account, |
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(b) | the closing deferred policyholder tax balance for the previous period of |
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(a) | is brought into account as an expense, if it is a negative figure, and |
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(b) | is brought into account as a receipt, if it is a positive figure. |
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(4) | The amount is brought into account under this section only if, in accordance |
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with generally accepted accounting practice, it is debited or credited in |
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accounts drawn up by the company for the period of account. |
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(5) | If the closing deferred policyholder tax balance for a period of account is a |
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liability, the amount of the balance is taken to be a negative figure for the |
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purposes of this section. |
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(6) | If the closing deferred policyholder tax balance for a period of account is an |
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asset, the amount of the balance is taken to be a positive figure for the purposes |
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(7) | Section 108 applies for determining the closing deferred policyholder tax |
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balance for a period of account. |
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108 | Meaning of “the closing deferred policyholder tax balance” etc |
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(1) | For the purposes of section 107 “the closing deferred policyholder tax balance |
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for a period of account” means so much of the closing amount shown, in |
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accordance with generally accepted accounting practice, in the accounts of the |
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company for that period in respect of deferred tax as is wholly attributable to |
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(2) | Provision forming part of the closing amount is “wholly attributable to |
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(a) | the provision is made in respect of a BLAGAB matter (see subsection |
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(b) | anything included in the closing amount in respect of that matter is |
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calculated wholly by reference to the policyholders’ rate of tax |
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chargeable on the policyholders’ share of the company’s I - E profit for |
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(3) | A “BLAGAB matter” means— |
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(a) | an amount of excess BLAGAB expenses, |
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(b) | an amount of acquisition expenses falling to be relieved in the future in |
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accordance with section 79, |
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(c) | an amount of expenses otherwise falling to be taken into account in the |
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future under the I - E rules, |
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(d) | an amount of BLAGAB allowable loss (within the meaning of section |
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210A of TCGA 1992) carried forward for future use, |
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(e) | an amount to which section 213 of TCGA 1992 applies (spreading of |
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gains and losses under section 212), or |
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(f) | an amount in respect of the future disposal (or part disposal) of an asset |
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which would fall to be taken into account in accordance with section 75. |
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(a) | for a period of account of the company the provision made in respect of |
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a BLAGAB matter is taken into account for the purposes of section 107, |
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(b) | for a subsequent period of account of the company the provision made |
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in respect of that matter is no longer wholly attributable to policyholder |
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tax because the condition in subsection (2)(b) ceases to be met, |
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| there is to be a reversal in the subsequent period of account in respect of the |
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provision (so far as section 107 does not otherwise apply in relation to the case). |
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(5) | The reversal in the subsequent period of account is to be made as follows— |
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(a) | if the provision was an amount which for accounting purposes was |
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regarded as an asset, a negative amount equal to that amount is to be |
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taken into account in calculating the closing deferred policyholder tax |
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balance for that period for the purposes of section 107, and |
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(b) | if the provision was an amount which for accounting purposes was |
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regarded as a liability, a positive amount equal to that amount is to be |
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taken into account in calculating the closing deferred policyholder tax |
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balance for that period for the purposes of section 107. |
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(6) | The Treasury may by order amend the definition of a “BLAGAB matter”. |
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(7) | An order under subsection (6) may contain incidental, supplementary, |
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consequential, transitional, transitory or saving provision. |
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Trade calculation rules applying to long-term business |
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109 | Application of Chapter |
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(1) | The rules contained in this Chapter have effect for the purpose of— |
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(a) | calculating the BLAGAB trade profit or loss of any basic life assurance |
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and general annuity business carried on by an insurance company, and |
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(b) | calculating for corporation tax purposes the profits of any non- |
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BLAGAB long-term business carried on by an insurance company, |
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| but, in the case of section 112, see also subsection (6) of that section. |
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(2) | In this Chapter references to the calculation of the profits are, in the case of the |
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calculation of the BLAGAB trade profit or loss, to be read as references to the |
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calculation of that profit or loss. |
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(3) | See also section 47 of CTA 2009 (losses calculated on same basis as profits). |
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(4) | In the case of the calculation of the BLAGAB trade profit or loss, see also |
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