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Finance Bill
Schedule 7 — Insurance business: gross roll-up business etc
Part 1 — Amendments

121

 

      (2)  

In subsection (2), insert at the appropriate places—

““child trust fund business” has the meaning given by section

431BA;”,

““foreign currency assets”, in relation to an insurance company

and any time during a period of account, means assets, other

5

than assets linked to gross roll-up business, which—

(a)   

are at that time managed under the control of a

person whose normal place of work is at a permanent

establishment outside the United Kingdom at or

through which the company carries on gross roll-up

10

business; or

(b)   

are denominated in a foreign currency and specified

in a certificate given by a director of the company no

later than three months after the end of the period of

account as being all of the assets of the company’s

15

long-term insurance fund which are held at that time

during the period of account to enable the company

to meet liabilities of its gross roll-up business which

are denominated in that currency;”,

““gross roll-up business” has the meaning given by section

20

431EA;”,

““immediate needs annuities business” means business which

consists of the effecting or carrying out of immediate needs

annuities (within the meaning of section 725 of ITTOIA

2005);”,

25

““individual savings account business” has the meaning given

by section 431BB;”, and

““PHI business” means long-term business other than life

assurance business (including the reinsurance of such long-

term business);”.

30

      (3)  

In subsection (2), omit the definitions of—

(a)   

“annuity business”, and

(b)   

“overseas life assurance fund”.

      (4)  

In subsection (2), for the definition of “life assurance business” substitute—

““life assurance business” means business which—

35

(a)   

consists of the effecting or carrying out of contracts of

insurance which fall within paragraph I, II, III or

VII(b) of Schedule 1 to the Financial Services and

Markets Act 2000 (Regulated Activities) Order 2001,

or

40

(b)   

is capital redemption business,

other than immediate needs annuities business;”.

      (5)  

In subsection (2), for the definition of “reinsurance business” substitute—

““reinsurance” includes retrocession;”.

      (6)  

After subsection (2ZE) insert—

45

“(2ZF)   

In this Chapter “capital redemption business” means any business of

a company carrying on insurance business in so far as it consists of

the effecting on the basis of actuarial calculations, and the carrying

out, of contracts under which, in return for one or more fixed

 

 

Finance Bill
Schedule 7 — Insurance business: gross roll-up business etc
Part 1 — Amendments

122

 

payments, a sum or series of sums of a specified amount become

payable at a future time or over a period.”

7          

In section 431A(3)(a) (power to amend), omit “and Schedule 19AA”.

8          

After section 431B insert—

“431BA  

  Meaning of “child trust fund business”

5

(1)   

In this Chapter “child trust fund business” means so much of a

company’s life assurance business as is referable to child trust fund

policies (but not including the reinsurance of such business).

(2)   

In this section “child trust fund policy” means a policy of life

insurance which is an investment under a child trust fund (within

10

the meaning of the Child Trust Funds Act 2004).

431BB   

  Meaning of “individual savings account business”

(1)   

In this Chapter “individual savings account business” means so

much of a company’s life assurance business as is referable to

individual savings account policies (but not including the

15

reinsurance of such business).

(2)   

In this section “individual savings account policy” means a policy of

life insurance which is an investment of a kind specified in

regulations made by virtue of section 695(1) of ITTOIA 2005.”

9     (1)  

Section 431D (meaning of “overseas life assurance business”) is amended as

20

follows.

      (2)  

For subsection (1) substitute—

“(1)   

In this Chapter “overseas life assurance business” means so much of

a company’s relevant life assurance business as is with a policy

holder or annuitant not residing in the United Kingdom (but not

25

including the reinsurance of such business).

(1A)   

In subsection (1) above “relevant life assurance business” means life

assurance business other than—

(a)   

pension business

(b)   

individual savings account business,

30

(c)   

child trust fund business, and

(d)   

business of any description prescribed by regulations made

by the Commissioners for Her Majesty’s Revenue and

Customs.”

      (3)  

In subsections (2) and (4), for “(1)” substitute “(1A)”.

35

      (4)  

In subsection (4), insert at the end “(including provision amending any

enactment or any instrument made under an enactment)”.

10         

After section 431E insert—

“431EA  

  Meaning of “gross roll-up business”

In this Chapter “gross roll-up business” means business of any of the

40

following kinds—

(a)   

pension business;

(b)   

child trust fund business;

 

 

Finance Bill
Schedule 7 — Insurance business: gross roll-up business etc
Part 1 — Amendments

123

 

(c)   

individual savings account business;

(d)   

life reinsurance business; and

(e)   

overseas life assurance business.”

11         

In section 431F (meaning of “basic life assurance and general annuity

business”), for the words from “(including” to the end substitute “other than

5

gross roll-up business”.

12         

In section 432ZA(7) (linked assets), for “long-term business other than life

assurance” (in both places) substitute “PHI”.

13    (1)  

Section 432A (apportionment of income and gains) is amended as follows.

      (2)  

In subsection (1A), for “shall be” substitute “is”.

10

      (3)  

In subsection (2), for paragraphs (a) to (f) substitute—

“(a)   

basic life assurance and general annuity business,

(b)   

gross roll-up business, and

(c)   

PHI business.”

      (4)  

In subsection (3), for “(apart from overseas life assurance business) shall be”

15

substitute “is”.

      (5)  

Omit subsection (4).

      (6)  

Before subsection (5) insert—

“(4A)   

Income arising from, and gains or losses accruing on the disposal of,

foreign currency assets is referable to gross roll-up business.”

20

      (7)  

In subsection (5)—

(a)   

for “shall be” substitute “is”, and

(b)   

omit “(apart from overseas life assurance business)”.

      (8)  

For subsections (6) to (6AA) substitute—

“(6)   

For the purposes of subsection (5) above “the relevant fraction”, in

25

relation to basic life assurance and general annuity business, is—equation: over[char[A],plus[char[A],char[B],char[C]]]

   

where—

A is the aggregate of—

(a)   

the mean of the opening and closing liabilities of the

basic life assurance and general annuity business (but

30

taking that mean to be nil if it would otherwise be

below nil), reduced (but not below nil) by the mean of

the opening and closing net values of any assets

directly referable to that category of business,

(b)   

if there has been a relevant reattribution, the mean of

35

the opening and closing amounts of the shareholders’

excess assets, and

(c)   

the mean of the appropriate parts (that is, the parts

relating to that category) of the opening and closing

amounts of the free assets amounts;

40

B is the aggregate of—

 

 

Finance Bill
Schedule 7 — Insurance business: gross roll-up business etc
Part 1 — Amendments

124

 

(a)   

the mean of the opening and closing liabilities of the

gross roll-up business (but taking that mean to be nil

if it would otherwise be below nil), reduced (but not

below nil) by the mean of the opening and closing net

values of any assets directly referable to that category

5

of business, and

(b)   

the mean of the appropriate parts (that is, the parts

relating to that category) of the opening and closing

amounts of the free assets amounts; and

C is the aggregate of—

10

(a)   

the mean of the opening and closing liabilities of the

PHI business (but taking that mean to be nil if it

would otherwise be below nil), reduced (but not

below nil) by the mean of the opening and closing net

values of any assets directly referable to that category

15

of business, and

(b)   

the mean of the appropriate parts (that is, the parts

relating to that category) of the opening and closing

amounts of the free assets amounts.

(6A)   

For the purposes of subsection (5) above “the relevant fraction”, in

20

relation to gross roll-up business, is—equation: over[char[B],plus[char[A],char[B],char[C]]]

   

where A, B and C have the same meaning as in subsection (6) above.

(6B)   

For the purposes of subsection (5) above “the relevant fraction”, in

relation to PHI business, is—equation: over[char[C],plus[char[A],char[B],char[C]]]

   

where A, B and C have the same meaning as in subsection (6) above.

25

(6C)   

But if the denominator found in accordance with subsection (6), (6A)

or (6B) above is nil, the relevant fraction for the purposes of

subsection (5) above in relation to the category of business in

question is such fraction as is just and reasonable.”

      (9)  

In subsection (7)—

30

(a)   

for “and (6A)” substitute “, (6A) and (6B)”,

(b)   

in paragraph (a), for “(4)” substitute “(4A)”,

(c)   

in paragraph (b), after “(3)” insert “or (4A)”, and

(d)   

in paragraph (c), omit “438B,”.

     (10)  

In subsection (8), for “subsections (6) and (6A)” substitute “subsection (6)”.

35

     (11)  

In subsection (8ZA), for “subsections (6) and (6A)” substitute “paragraph (c)

of the definition of A and paragraph (b) of the definitions of B and C in

subsection (6)”.

     (12)  

Omit subsection (9).

14    (1)  

Section 432AA (Schedule A business or overseas property business) is

40

amended as follows.

      (2)  

Omit subsection (3).

 

 

Finance Bill
Schedule 7 — Insurance business: gross roll-up business etc
Part 1 — Amendments

125

 

      (3)  

In subsection (4), for paragraphs (a) to (d) substitute—

“(a)   

basic life assurance and general annuity business;

(b)   

gross roll-up business; and

(c)   

PHI business.”

      (4)  

In subsection (5), omit “(3) or”.

5

15         

In section 432AB (losses from Schedule A business or overseas property

business), omit subsection (6).

16    (1)  

Section 432B (apportionment of receipts brought into account) is amended

as follows.

      (2)  

In subsection (1)—

10

(a)   

for “432F” substitute “432G”, and

(b)   

for “any category of life assurance business” substitute “gross roll-up

business”.

      (3)  

In subsection (2), for “432F” substitute “432G”.

      (4)  

In subsection (3)—

15

(a)   

for “Sections 432C and 432D apply” substitute “Section 432C

applies”, and

(b)   

insert at the end “(and section 432G applies in either case)”.

      (5)  

In subsection (4)—

(a)   

for “sections 432C and 432D” substitute “section 432C”,

20

(b)   

in paragraph (a), for “apply” substitute “applies”, and

(c)   

omit paragraph (b) and the word “and” before it.

      (6)  

In subsection (5)—

(a)   

for the words from “any category” to the end of paragraph (b)

substitute “gross roll-up business”, and

25

(b)   

omit “the relevant fraction of”.

      (7)  

In subsection (6), for the words from “432D” to “annuity business” substitute

“432C to gross roll-up business”.

      (8)  

In subsection (7), omit “the relevant fraction of” (in both places).

      (9)  

In subsection (8A), omit “the relevant fraction of”.

30

     (10)  

In subsection (8C), omit “the relevant fraction of”.

     (11)  

In subsection (9), omit the definitions of—

(a)   

“the relevant fraction”, and

(b)   

“the section 83 net amount”.

     (12)  

In subsection (10)—

35

(a)   

in paragraphs (a) and (b), for “paragraph (a)(ii)” substitute “the

definition of A, in paragraph (b)”, and

(b)   

for paragraph (c) substitute—

“(c)   

the substitution for the definitions of B and C of—

“B is the amount that would be given by A if A

40

applied in relation to gross roll-up business;

and

 

 

Finance Bill
Schedule 7 — Insurance business: gross roll-up business etc
Part 1 — Amendments

126

 

C is the amount that would be given by A if A

applied in relation to PHI business.”.”

17         

For section 432C substitute—

“432C   

  Section 432B apportionment: non-participating funds

(1)   

This section specifies the extent to which the net amount is referable

5

to life assurance business or to gross roll-up business.

(2)   

In this section “the net amount” means the aggregate of the amounts

brought into account—

(a)   

as investment income,

(b)   

as an increase in the value of assets, or

10

(c)   

as other income,

   

less the aggregate of the amounts brought into account as a decrease

in the value of assets.

(3)   

To the extent that the net amount is attributable to—

(a)   

assets linked to life assurance business, or

15

(b)   

foreign currency assets,

   

it is referable to life assurance business.

(4)   

There is also referable to life assurance business the appropriate

fraction of so much of the net amount as is not attributable to linked

assets or foreign currency assets.

20

(5)   

For the purposes of subsection (4) above “the appropriate fraction”

is—equation: over[char[A],plus[char[A],char[B]]]

   

where—

A is the mean of the opening and closing liabilities of the

relevant business so far as referable to life assurance business

25

(but taking that mean to be nil if it would otherwise be below

nil), reduced (but not below nil) by the aggregate of the mean

of the opening and closing net values of assets linked to the

relevant business so far as so referable and foreign currency

assets; and

30

B is the mean of the opening and closing liabilities of the

relevant business so far as referable to PHI business, reduced

(but not below nil) by the mean of the opening and closing

net values of any assets linked to PHI business.

(6)   

But if the denominator found in accordance with subsection (5)

35

above is nil, the appropriate fraction for the purposes of subsection

(4) above is such fraction as is just and reasonable.

(7)   

To the extent that the net amount is attributable to—

(a)   

assets linked to gross roll-up business, or

(b)   

foreign currency assets,

40

   

it is referable to gross roll-up business.

(8)   

There is also referable to gross roll-up business the relevant fraction

of so much of the net amount as is not attributable to linked assets or

foreign currency assets.

 

 

Finance Bill
Schedule 7 — Insurance business: gross roll-up business etc
Part 1 — Amendments

127

 

(9)   

For the purposes of subsection (8) above “the relevant fraction” is—equation: over[char[C],plus[char[C],char[D]]]

   

where—

C is the mean of the opening and closing liabilities of the

relevant business so far as referable to gross roll-up business

(but taking that mean to be nil if it would otherwise be below

5

nil), reduced (but not below nil) by the aggregate of the mean

of the opening and closing net values of any assets linked to

gross roll-up business and foreign currency assets; and

D is the mean of the opening and closing liabilities of the

relevant business so far as referable to basic life assurance

10

and general annuity business or PHI business (but taking that

mean to be nil if it would otherwise be below nil), reduced

(but not below nil) by the mean of the opening and closing

net values of any assets linked to either of those categories of

business.

15

(10)   

But if the denominator found in accordance with subsection (9)

above is nil, the relevant fraction for the purposes of subsection (8)

above is such fraction as is just and reasonable.

(11)   

For the purposes of this section, so much of the net amount—

(a)   

as is brought into account as other income in an internal

20

linked fund of the company, and

(b)   

as is not attributable to assets of that fund,

   

is to be treated as linked to a category of business to the same extent

as income attributable to an asset of the fund would, by virtue of

section 432ZA, be referable to that category of business.”

25

18         

Omit section 432D (section 432B apportionment: value of non-participating

funds).

19    (1)  

Section 432E (section 432B apportionment: participating funds) is amended

as follows.

      (2)  

For subsection (1) substitute—

30

“(1)   

The part of the net amount which is referable to life assurance

business or to gross roll-up business is—

(a)   

the amount determined in accordance with subsections (2)

and (2A) below, or

(b)   

if greater, the amount determined in accordance with

35

subsection (3) below.

(1A)   

In this section “the net amount” means the aggregate of the amounts

brought into account—

(a)   

as investment income,

(b)   

as an increase in the value of assets, or

40

(c)   

as other income,

   

less the aggregate of the amounts brought into account as a decrease

in the value of assets.”

      (3)  

In subsection (2)—

 

 

 
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