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Finance Bill
Schedule 9 — Insurance companies etc

139

 

Meaning of “brought into account”

13    (1)  

Section 83A of FA 1989 is amended as follows.

      (2)  

In subsection (2) (accounts which are recognised for the purposes of sections

82A to 83AB)—

(a)   

in paragraph (b) (separate revenue account prepared under Chapter

5

9 of the Prudential Sourcebook (Insurers) in respect of a part of the

company’s long-term business to be a recognised account) for “part

of that business” substitute “with-profits fund (see subsection (6))”;

(b)   

omit the words from “Paragraph (b) above” to the end of the

subsection.

10

      (3)  

After subsection (3) insert—

“(3A)   

Where, in the case of any with-profits fund in respect of which there

is prepared such a separate account (“the sub-fund”),—

(a)   

the sub-fund forms part of another with-profits fund (“the

wider fund”) in respect of which such a separate account is

15

also prepared,

(b)   

in the case of a company whose life assurance business is

mutual business, the sub-fund and each other with-profits

fund which forms part of the wider fund are 100:0 funds, and

(c)   

the wider fund—

20

(i)   

does not form part of another with-profits fund in

respect of which such a separate account is also

prepared, or

(ii)   

forms part of another with-profits fund in respect of

which such a separate account is also prepared and

25

that separate account is treated by this subsection as

not being a recognised account for the purposes of

those sections,

   

the account in respect of the wider fund shall not be a recognised

account for the purposes of those sections.

30

(3B)   

Where, in the case of such a separate account prepared in respect of

a with-profits fund,—

(a)   

the account is not prevented from being a recognised account

for the purposes of those sections by virtue of subsection (3A)

above, but

35

(b)   

if paragraph (b) of that subsection were to be omitted, the

account would be prevented from being such a recognised

account by virtue of that subsection,

   

no such separate account prepared in respect of a with-profits fund

forming part of that fund shall be such a recognised account.

40

(3C)   

In subsection (3A) above “100:0 fund” means a fund in the case of

which—

(a)   

the policy holders of the fund are entitled to participate in all

the profits of the fund, and

(b)   

no other persons are entitled to participate in any of the

45

profits of the fund.

 

 

Finance Bill
Schedule 9 — Insurance companies etc

140

 

(3D)   

Subsection (3E) below applies where there is prepared such a

separate account (“the with-profits account”) in respect of a with-

profits fund—

(a)   

of which no other with-profits fund forms part, but

(b)   

of which a non-profit fund (see subsection (6)) forms part.

5

(3E)   

Where this subsection applies—

(a)   

the with-profits account shall not be a recognised account for

the purposes of those sections, but

(b)   

there shall be treated as having been required and prepared

a further separate revenue account covering so much of the

10

items brought into account in the with-profits account as

remains after excluding the items brought into account in

that account in respect of the non-profit fund.”.

      (4)  

For subsection (4) substitute—

“(4)   

If—

15

(a)   

a company prepares a revenue account in respect of the

whole of its long-term business (“the main account”),

(b)   

it prepares one or more such separate accounts as are

mentioned in subsection (2)(b) above, and

(c)   

the total of the items brought into account in the separate

20

accounts—

(i)   

excluding any such accounts which by virtue of

subsection (3A), (3B) or (3E)(a) above are not

recognised accounts for the purposes of those

sections, but

25

(ii)   

including any such accounts which by virtue of

subsection (3E)(b) above are treated as having been

required and prepared,

   

is not equal to the total amount brought into account in the

main account,

30

   

there shall be treated as having been required and prepared a further

separate revenue account covering the balance.”.

      (5)  

At the end of the section insert—

“(6)   

In this section “with-profits fund” and “non-profit fund” have the

same meaning as in the Integrated Prudential Sourcebook.”.

35

      (6)  

The amendments made by this paragraph have effect in relation to periods

of account beginning on or after 1st January 2005.

Changes in recognised accounts: attribution of amounts carried forward under s.432F of ICTA

14    (1)  

After section 83A of FA 1989 insert—

“83B    

Changes in recognised accounts: attribution of amounts carried

40

forward under s.432F of Taxes Act 1988

(1)   

This section applies to a company where any revenue account that is

recognised for a period of account (the “new period of account”)

relates to funds or business which is different from the funds or

business to which a revenue account that was recognised for the

45

preceding period of account relates.

 

 

Finance Bill
Schedule 9 — Insurance companies etc

141

 

(2)   

Any subsection (2) excess (within the meaning of section 432F(2) of

the Taxes Act 1988) which would have been available under section

432F(3) or (4) of that Act to reduce a subsection (3) figure (within the

meaning of section 432F(1) of that Act) of the company in the new

period of account shall be attributed between the revenue accounts

5

that are recognised for that period of account in such manner as is

appropriate.

(3)   

In this section “recognised” means recognised, by virtue of section

83A, for the purposes of sections 82A to 83AB.”.

      (2)  

The amendment made by this paragraph has effect in relation to new

10

periods of account (within the meaning given by section 83B(1) of FA 1989)

beginning on or after 1st January 2005.

Charge of certain receipts of basic life assurance business

15    (1)  

Section 85 of FA 1989 is amended as follows.

      (2)  

In subsection (2) (receipts excluded from charge under Case VI of Schedule

15

D in respect of receipts referable to company’s basic life assurance and

general annuity business) after paragraph (e) insert “; or

(f)   

any payment received under the Financial Services

Compensation Scheme to enable the company to meet its

obligations to policy holders.”.

20

      (3)  

In subsection (2C) (rules as to whether receipt is referable to company’s basic

life assurance and general annuity business for the purposes of subsection

(1)) after paragraph (a) insert—

“(aa)   

in the case of a repayment or refund of expenses other than

acquisition expenses, the expenses—

25

(i)   

were attributable to basic life assurance and general

annuity business for the purposes of Step 1 in

subsection (7) of the new section 76 (see subsection (8)

of that section), or

(ii)   

fell to be deducted by virtue of subsection (1) of the

30

old section 76;

   

and for this purpose, “the new section 76” and “the old

section 76” have the same meaning as in section 44 of the

Finance Act 2004 (see subsection (8) of that section),”.

      (4)  

The amendments made by this paragraph have effect in relation to

35

accounting periods ending on or after 16th March 2005.

Corporation tax: policy holders’ fraction of profits

16    (1)  

Section 88 of FA 1989 is amended as follows.

      (2)  

In subsection (3A) (meaning of “income and gains of the company’s life

assurance business” in subsection (3)) after paragraph (a) insert—

40

“(aa)   

receipts of the company chargeable under Case VI of

Schedule D by virtue of section 85(1) above,

(ab)   

income of the company treated as referable to basic life

assurance and general annuity business by section 441B(2) of

the Taxes Act 1988 (treatment of UK land),

45

 

 

Finance Bill
Schedule 9 — Insurance companies etc

142

 

(ac)   

amounts treated as accruing to the company and charged to

tax under Case VI of Schedule D by virtue of section 442A of

that Act (taxation of investment return where risk reinsured),

and”.

      (3)  

The amendment made by this paragraph has effect in relation to periods of

5

account beginning on or after 1st January 2005.

Overseas life insurance companies

17    (1)  

Section 156 of FA 2003 is amended as follows.

      (2)  

For subsection (4) (regulations amending certain provisions relating to

overseas life insurance companies may be made with effect from 1st January

10

2003) substitute—

“(4)   

Regulations under this section may be made so as to have effect in

relation to accounting periods or periods of account (whenever

beginning) which end on or after the day on which the regulations

come into force.”.

15

Meaning of “pension business”

18    (1)  

Schedule 35 to FA 2004 is amended as follows.

      (2)  

Paragraph 20 (life assurance: meaning of “pension business”) is amended as

follows.

      (3)  

In the section 431B of ICTA substituted by that paragraph, in subsection

20

(2)—

(a)   

after “registered pension scheme” (where first occurring) insert “by

virtue of the withdrawal of registration of the pension scheme under

section 157 of the Finance Act 2004”;

(b)   

after “in which the pension scheme” insert “so”.

25

      (4)  

In that section, insert at the end—

“(3)   

Where—

(a)   

immediately before 6th April 2006 an annuity contract falls

within any of the descriptions of contracts specified in

subsection (2) of this section as it had effect immediately

30

before that date, but

(b)   

on or after that date the contract does not fall to be regarded

for the purposes of this section as having been entered into

for the purposes of a registered pension scheme,

   

the contract is to be treated for the purposes of this section as having

35

been entered into for such purposes.”.

      (5)  

Paragraph 22 (friendly societies: meaning of “pension business”) is amended

as follows.

      (6)  

In sub-paragraph (3), in the subsection (2B) of section 466 of ICTA inserted

by that sub-paragraph—

40

(a)   

after “registered pension scheme” (where first occurring) insert “by

virtue of the withdrawal of registration of the pension scheme under

section 157 of the Finance Act 2004”;

(b)   

after “in which the pension scheme” insert “so”.

 

 

Finance Bill
Schedule 9 — Insurance companies etc

143

 

      (7)  

The preceding provisions of this paragraph come into force on 6th April

2006.

Miscellaneous references to “class” of business

19    (1)  

In section 432B of ICTA (apportionment of receipts brought into account) in

subsection (1), for “class” substitute “category”.

5

      (2)  

In section 444A of ICTA (transfers of business) in subsection (3), for “class”

substitute “category”.

      (3)  

In Schedule 12 to FA 1997 (leasing arrangements: finance leases and loans)

in paragraph 19 (companies carrying on life assurance business) in sub-

paragraph (2), for “class” substitute “category”.

10

      (4)  

In Schedule 29 to FA 2002 (gains and losses of a company from intangible

fixed assets) in paragraph 138 (interpretation provisions relating to

insurance companies) in sub-paragraph (3), for “class” substitute “category”.

      (5)  

The amendments made by this paragraph have effect in relation to periods

of account beginning on or after 1st January 2005.

15

Transfers of business: references to accounting period ending with day of transfer

20    (1)  

Section 12 of ICTA (corporation tax: basis of, and periods for, assessment) is

amended as follows.

      (2)  

In subsection (7A), after “(7ZA) above” insert “and subject to subsection (7C)

below”.

20

      (3)  

After subsection (7B) insert—

“(7C)   

Where subsection (1) of section 444AA applies in the case of an

insurance business transfer scheme—

(a)   

an accounting period of the transferor shall end for purposes

of corporation tax—

25

(i)   

with the end of the period covered by the periodical

return deemed by virtue of subsection (2) of that

section, or

(ii)   

where the last period covered by an actual periodical

return of the transferor ends immediately before the

30

transfer, with the end of that period,

   

(so that an accounting period will end immediately before the

transfer), and

(b)   

an accounting period of the transferor shall end for purposes

of corporation tax with the end of the period covered by the

35

periodical return deemed by virtue of subsection (3) of that

section (so that the time of the transfer shall be an accounting

period of the transferor);

   

and for this purpose, expressions used in this subsection and in that

section have the same meaning in this subsection as in that section.”.

40

      (4)  

In section 444AB of ICTA (transfers of business: charge on transferor

retaining assets) in subsection (3), for “ending with the day of the transfer”

substitute “ending immediately before the transfer”.

 

 

Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 1 — Amendments coming into force in accordance with paragraph 16

144

 

      (5)  

In section 444ABA of ICTA (subsequent charge in certain cases within

section 444AB of ICTA) in subsection (3), for “ending with the day of the

transfer” substitute “ending immediately before the transfer”.

      (6)  

In section 213 of TCGA 1992 (spreading of gains and losses under section 212

of TCGA 1992) at the end insert—

5

“(10)   

If the transfer is one to which section 444AA(1) of the Taxes Act

applies, the references in this section to the accounting period of the

transferor ending with the day of the transfer are references to the

accounting period ending immediately before the transfer.”.

      (7)  

The amendments made by sub-paragraphs (2) to (5) have effect in relation to

10

insurance business transfer schemes taking place on or after 16th March

2005.

      (8)  

The amendment made by sub-paragraph (6) has effect where the accounting

period for which the net amount represents an excess of losses over gains is

an accounting period beginning on or after 1st January 2003.

15

Schedule 10

Section 49

 

Stamp duty land tax: miscellaneous amendments

Part 1

Amendments coming into force in accordance with paragraph 16

Introduction

20

1          

Part 4 of FA 2003 (stamp duty land tax) is amended in accordance with this

Part of this Schedule.

Transfer of rights: exclusion of transaction to which alternative finance provisions apply

2          

In section 45 (contract and conveyance: effect of transfer of rights) at the end

of subsection (3) insert “except in a case where the secondary contract gives

25

rise to a transaction that is exempt from charge by virtue of subsection (3) of

section 73 (alternative property finance: land sold to financial institution and

re-sold to individual)”.

Group relief

3          

In paragraph 1 of Schedule 7 (group relief), in sub-paragraph (7) for

30

“paragraph 3” substitute “paragraphs 3 and 4A”.

4          

In paragraph 3 of Schedule 7 (withdrawal of group relief)—

(a)   

for sub-paragraph (2) substitute—

    “(2)  

The amount chargeable is the tax that would have been

chargeable in respect of the relevant transaction but for

35

group relief if the chargeable consideration for that

transaction had been an amount equal to—

(a)   

the market value of the subject-matter of the

transaction, and

 

 

Finance Bill
Schedule 10 — Stamp duty land tax: miscellaneous amendments
Part 1 — Amendments coming into force in accordance with paragraph 16

145

 

(b)   

if the acquisition was the grant of a lease at a rent,

that rent,

           

or, as the case may be, an appropriate proportion of the tax

that would have been so chargeable.”, and

(b)   

at the end of sub-paragraph (5) insert “and paragraph 4A

5

(withdrawal of group relief in certain cases involving successive

transactions)”.

5          

In paragraph 4 of Schedule 7 (cases in which group relief is not

withdrawn)—

(a)   

in sub-paragraph (3), for paragraph (b) substitute—

10

“(b)   

another company that—

(i)   

is above the vendor in the group structure,

and

(ii)   

as a result of the transaction ceases to be a

member of the same group as the

15

purchaser.”, and

(b)   

in sub-paragraph (5), for “this purpose” substitute “the purposes of

sub-paragraphs (3) and (4)”.

6          

After paragraph 4 of Schedule 7 insert—

“Withdrawal of group relief in certain cases involving successive transactions

20

4A    (1)  

Where, in the case of a transaction (“the relevant transaction”) that

is exempt from charge by virtue of paragraph 1 (group relief)—

(a)   

there is a change in the control of the purchaser,

(b)   

that change occurs—

(i)   

before the end of the period of three years

25

beginning with the effective date of the relevant

transaction, or

(ii)   

in pursuance of, or in connection with,

arrangements made before the end of that period,

(c)   

apart from this paragraph, group relief in relation to the

30

relevant transaction would not be withdrawn under

paragraph 3, and

(d)   

any previous transaction falls within sub-paragraph (2),

           

paragraphs 3 and 4 have effect in relation to the relevant

transaction as if the vendor in relation to the earliest previous

35

transaction falling within sub-paragraph (2) were the vendor in

relation to the relevant transaction.

      (2)  

A previous transaction falls within this sub-paragraph if—

(a)   

the previous transaction is exempt from charge by virtue of

paragraph 1, 7 or 8,

40

(b)   

the effective date of the previous transaction is less than

three years before the date of the event falling within sub-

paragraph (1)(a),

(c)   

the chargeable interest acquired under the relevant

transaction by the purchaser in relation to that transaction

45

is the same as, comprises, forms part of, or is derived from,

the chargeable interest acquired under the previous

 

 

 
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