|
| |
|
company for the period in respect of its life assurance |
| |
business as does not exceed the amount of any profits of the |
| |
company for the period so chargeable, and”. |
| |
Taxation of Chargeable Gains Act 1992 (c. 12) |
| |
60 | TCGA 1992 is amended as follows. |
| 5 |
61 | In section 204(10) (policies of insurance and non-deferred annuities)— |
| |
(a) | for “as defined in section 458(3)” substitute “within the meaning of |
| |
Chapter 1 of Part 12”, and |
| |
| |
| 10 |
(a) | omit paragraph (b) of subsection (6) and the word “or” before it, and |
| |
(b) | in subsection (8) (disposal and acquisition of section 440A securities), |
| |
in the definition of “chargeable section 440A holding”, for “(2)(a)(iii)” |
| |
| |
63 | In section 212(2) (annual deemed disposal of holdings of certain assets), for |
| 15 |
the words from “pension business” to the end substitute “gross roll-up |
| |
| |
64 | In section 213(1A) (spreading of gains and losses under section 212), omit the |
| |
words following “general annuity business”. |
| |
| 20 |
65 | FA 1996 is amended as follows. |
| |
66 | In paragraph 12(3) of Schedule 9 (loan relationships: special computational |
| |
provisions), for “440(4)(a) to (e)” substitute “440(4)(a), (d) and (e)”. |
| |
67 (1) | Schedule 11 (loan relationships: special provisions for insurers) is amended |
| |
| 25 |
(2) | In paragraph 2, for sub-paragraph (1) substitute— |
| |
“(1) | Where an insurance company carries on basic life assurance and |
| |
general annuity business, a separate computation, using only the |
| |
non-trading credits and non-trading debits referable to that |
| |
business, shall be made for the purposes of this Chapter in relation |
| 30 |
| |
| |
(a) | after “(6A)” insert “, (6B)”, |
| |
(b) | for “subsections (6)(a) and (6A)(a)” substitute “subsection (6)”, and |
| |
(c) | omit paragraph (c) and the word “and” before it. |
| 35 |
| |
(a) | in sub-paragraph (1), omit paragraph (b) and the word “or” before it, |
| |
(b) | in sub-paragraph (2)(a), for “the relevant category of business” |
| |
substitute “basic life assurance and general annuity business”, |
| |
(c) | in sub-paragraph (7), for “the relevant category of business” |
| 40 |
substitute “its basic life assurance and general annuity business”, |
| |
|
| |
|
| |
|
(d) | in sub-paragraph (10), for “the relevant category of business” (in |
| |
both places) substitute “basic life assurance and general annuity |
| |
| |
(e) | omit sub-paragraph (16). |
| |
Capital Allowances Act 2001 (c. 2) |
| 5 |
68 | CAA 2001 is amended as follows. |
| |
69 (1) | Section 255 (apportionment of allowances and charges) is amended as |
| |
| |
(2) | For subsections (1) and (1A) substitute— |
| |
“(1) | Except where subsection (3) applies, any allowance to which the |
| 10 |
company is entitled, and any charge to which it is liable, for a |
| |
chargeable period in respect of a management asset must be |
| |
apportioned between basic life assurance and general annuity |
| |
business, gross roll-up business and PHI business in accordance with |
| |
subsections (1A) and (1B). |
| 15 |
(1A) | The allowance or charge is to be apportioned to a category of |
| |
business using the formula—![equation: cross[char[A],over[char[B],char[C]]]](missing.gif) |
| |
| |
A is the amount of the allowance or charge, |
| |
B is the mean of the opening and closing liabilities of that |
| 20 |
category of business, and |
| |
C is the mean of the opening and closing liabilities of all the |
| |
categories of business mentioned in subsection (1) which are |
| |
carried on by the company. |
| |
(1B) | If C is nil or below nil, the allowance or charge to be apportioned to |
| 25 |
a category of business is such as is just and reasonable.” |
| |
| |
| |
(a) | in paragraph (a), for “section 441 of ICTA in respect of its overseas |
| |
life assurance business” substitute “section 436A of ICTA (gross roll- |
| 30 |
| |
(b) | in paragraph (b), for “provided outside the United Kingdom for use |
| |
for the management of that business” substitute “held for the |
| |
purposes of a permanent establishment outside the United Kingdom |
| |
at or through which the company carries on gross roll-up business”. |
| 35 |
70 (1) | Section 256 (different giving effect rules for different categories of business) |
| |
| |
(2) | In subsection (3), for paragraphs (a) to (c) substitute “section 436A of ICTA |
| |
(gross roll-up business)”. |
| |
| 40 |
(a) | for “profit” substitute “profits”, |
| |
|
| |
|
| |
|
(b) | in paragraph (a), for “any particular category of business” substitute |
| |
“gross roll-up business” and for “that category of business” |
| |
substitute “its gross roll-up business”, and |
| |
(c) | in paragraph (b), for “any particular category of business” substitute |
| |
“gross roll-up business” and for “that category of business” |
| 5 |
substitute “its gross roll-up business”. |
| |
71 (1) | Section 545 (investment assets) is amended as follows. |
| |
(2) | In subsection (3), in the second sentence, for “sections 432ZA to 432E, or |
| |
section 438B,” substitute “section 432A”. |
| |
| 10 |
(a) | for the words from “under—” to “no allowance” substitute “under |
| |
section 436A of ICTA (gross roll-up business), no allowance”, and |
| |
(b) | for “the category of life assurance business in question” substitute |
| |
“gross roll-up business”. |
| |
| 15 |
72 | In paragraph 20 of Schedule 22 to FA 2001 (remediation of contaminated |
| |
land), for the words from the beginning to “Schedule D,” substitute “In |
| |
computing in accordance with the provisions of the Taxes Act 1988 |
| |
applicable to Case I of Schedule D the profits for any accounting period |
| |
arising to an insurance company from its life assurance business, or from its |
| 20 |
gross roll-up business,”. |
| |
| |
73 | FA 2002 is amended as follows. |
| |
74 (1) | Schedule 12 (tax relief for expenditure on research and development) is |
| |
| 25 |
(2) | In paragraph 13, for sub-paragraph (3) substitute— |
| |
“(3) | Part 3 of this Schedule has effect in relation to any gross roll-up |
| |
business of the company as if the references to the trade carried on |
| |
by the company were references to that business (and sub- |
| |
paragraph (2) does not apply in relation to that business).” |
| 30 |
| |
(a) | for “(profits of life assurance business chargeable to tax under Case |
| |
VI of Schedule D)” substitute “(gross roll-up business)” and for “a |
| |
part of the life assurance business” substitute “the gross roll-up |
| |
| 35 |
(b) | for “that part” substitute “the gross roll-up business”. |
| |
75 (1) | Schedule 26 (derivative contracts) is amended as follows. |
| |
(2) | In paragraph 12(2), for “section 458” substitute “Chapter 1 of Part 12”. |
| |
(3) | In paragraph 29(1), for “440(4)(a) to (e)” substitute “440(4)(a), (d) and (e)”. |
| |
Income Tax (Trading and Other Income) Act 2005 (c. 5) |
| 40 |
76 | ITTOIA 2005 is amended as follows. |
| |
|
| |
|
| |
|
77 | In section 473(2) (policies and contracts to which Chapter 9 applies), in the |
| |
definition of “capital redemption policy”, for “as defined in section 458(3)” |
| |
substitute “within the meaning of Chapter 1 of Part 12”. |
| |
78 | In section 476(3) (special rules: foreign policies), in the definition of “foreign |
| |
capital redemption policy”, for “431D(1)(a)” substitute “431D(1)”. |
| 5 |
79 | In Schedule 2 (transitionals and savings etc), in paragraph 118(2), for “from |
| |
“other than” onwards in the definition of “annuity business”” substitute |
| |
“following paragraph (b) in the definition of “life assurance business””. |
| |
| |
| 10 |
| |
80 (1) | A loss incurred by an insurance company in a pre-commencement period |
| |
may not be set off against profits of the company chargeable under section |
| |
436A of ICTA in a post-commencement period, except in accordance with |
| |
| 15 |
(2) | In this Part of this Schedule— |
| |
“the commencement period”, in relation to an insurance company, |
| |
means the first period of account of the company to begin on or after |
| |
| |
“pre-commencement period”, in relation to an insurance company, |
| 20 |
means a period of account of the company beginning before 1st |
| |
| |
“post-commencement period”, in relation to an insurance company, |
| |
means a period of account of the company beginning on or after 1st |
| |
| 25 |
(3) | Expressions which are— |
| |
(a) | used in this Part of this Schedule in relation to a period of account, |
| |
| |
(b) | used in Chapter 1 of Part 12 of ICTA, |
| |
| have the same meaning in this Part of this Schedule in relation to that |
| 30 |
accounting period as they have in that Chapter (as that Chapter has effect in |
| |
relation to that period of account). |
| |
Carry forward of unused pension business losses |
| |
81 (1) | An unused pension business loss of an insurance company (see sub- |
| |
paragraph (4)) is to be treated as if it were a loss incurred by the company on |
| 35 |
its gross roll-up business in the period of account immediately preceding the |
| |
| |
(2) | Subsections (4) and (5) of section 436A of ICTA accordingly apply to the loss, |
| |
but subject to sub-paragraph (3) (and to subsection (7) of that section). |
| |
(3) | The amount by which the company’s profits charged under that section in a |
| 40 |
period of account is to be treated as reduced under subsection (4)(b) of that |
| |
section by virtue of this paragraph must not exceed—![equation: cross[times[char[C],char[P]],over[times[char[P],char[B],char[L]],times[char[G],char[
R],char[B],char[L]]]]](missing.gif) |
| |
|
| |
|
| |
|
| |
“CP” is the amount of the company’s profits chargeable under that |
| |
section in the period of account, |
| |
“PBL” is the mean of the opening and closing liabilities of the |
| |
company’s pension business for the period of account, and |
| 5 |
“GRBL” is the mean of the opening and closing liabilities of the |
| |
company’s gross roll-up business for the period of account. |
| |
(4) | In this paragraph “unused pension business loss”, in relation to an insurance |
| |
company, means so much of any losses incurred by the company on its |
| |
pension business in any pre-commencement period as were not set off under |
| 10 |
section 436(3)(c) of ICTA against profits in any such period. |
| |
Carry forward of unused non-pension business losses |
| |
82 (1) | An unused non-pension business loss of an insurance company (see |
| |
paragraph 83) is to be treated as if it were a loss incurred by the company on |
| |
its gross roll-up business in the period of account immediately preceding the |
| 15 |
| |
(2) | Subsections (4) and (5) of section 436A of ICTA accordingly apply to the loss, |
| |
but subject to sub-paragraph (3) (and to subsection (7) of that section). |
| |
(3) | The amount by which an insurance company’s profits charged under that |
| |
section in a period of account are to be treated as reduced under subsection |
| 20 |
(4)(b) of that section is to be determined— |
| |
(a) | first by giving effect to subsection (4)(b) in respect of a loss treated as |
| |
incurred by the company on its gross roll-up business by virtue of |
| |
| |
(b) | then by giving effect to subsection (4)(b) in respect of a loss treated as |
| 25 |
incurred by the company on its gross roll-up business by virtue of |
| |
| |
| (before giving effect to subsection (4)(b) in respect of losses incurred by the |
| |
company on its gross roll-up business in post-commencement periods). |
| |
83 (1) | In paragraph 82 “unused non-pension business loss”, in relation to an |
| 30 |
insurance company, means the aggregate of the following amounts— |
| |
(a) | any unexhausted individual savings account business loss (see sub- |
| |
| |
(b) | any unexhausted child trust fund business loss (see sub-paragraph |
| |
| 35 |
(c) | any unexhausted life reinsurance business loss (see sub-paragraph |
| |
| |
(d) | any unexhausted overseas life assurance business loss (see sub- |
| |
| |
(2) | In this paragraph “unexhausted individual savings account business loss”, |
| 40 |
in relation to an insurance company, means so much of any losses incurred |
| |
by the company on its individual savings account business in any pre- |
| |
commencement period as were not set off by virtue of a relevant provision |
| |
(see sub-paragraph (6)) against profits in any such period. |
| |
(3) | In this paragraph “unexhausted child trust fund business loss”, in relation to |
| 45 |
an insurance company, means so much of any losses incurred by the |
| |
company on its child trust fund business in any pre-commencement period |
| |
|
| |
|
| |
|
as were not set off by virtue of a relevant provision against profits in any |
| |
| |
(4) | In this paragraph “unexhausted life reinsurance business loss”, in relation to |
| |
an insurance company, means so much of any losses incurred by the |
| |
company on its life reinsurance business in any pre-commencement period |
| 5 |
as were not set off under section 439B(3)(c) of ICTA against profits in any |
| |
| |
(5) | In this paragraph “unexhausted overseas life assurance business loss”, in |
| |
relation to an insurance company, means so much of any losses incurred by |
| |
the company on its overseas life assurance business in any pre- |
| 10 |
commencement period as were not set off under section 441(4)(b) of ICTA |
| |
against profits in any such period. |
| |
(6) | In this paragraph “relevant provision” means— |
| |
(a) | regulation 13 of the Individual Savings Account (Insurance |
| |
Companies) Regulations 1998 (S.I. 1998/1871), or |
| 15 |
(b) | regulation 11 of the Child Trust Funds (Insurance Companies) |
| |
Regulations 2004 (S.I. 2004/2680). |
| |
“Section 432F(2) excesses” |
| |
84 | Where there is a subsection (2) excess (within the meaning of section 432F of |
| |
ICTA) for any category of business of an insurance company in the period of |
| 20 |
account immediately preceding the commencement period it shall be taken |
| |
to be, or form part of, the subsection (2) excess falling to be carried forward |
| |
under subsection (3) of that section (as amended by this Schedule) and used |
| |
in a post-commencement period. |
| |
| 25 |
| |
Insurance companies: basis of taxation etc |
| |
| |
| |
Income and Corporation Taxes Act 1988 (c. 1) |
| |
1 | ICTA is amended as follows. |
| 30 |
2 (1) | Section 76 (expenses of insurance companies) is amended as follows. |
| |
(2) | In subsection (1)(b), for “not charged to tax in respect of that business under |
| |
Case I of Schedule D” substitute “charged to tax in respect of that business |
| |
under the I minus E basis”. |
| |
| 35 |
(a) | in Step 8, for “basic” substitute “expenses”, and |
| |
| |
(4) | Omit subsections (10) and (11). |
| |
| |
|
| |
|
| |
|
(a) | for “Step 10” substitute “Step 8”, and |
| |
(b) | after “next accounting period” insert “for which the company is |
| |
charged to tax in respect of its life assurance business under the I |
| |
| |
(6) | For subsection (13) substitute— |
| 5 |
“(13) | Where for any accounting period excess adjusted Case I profits are |
| |
charged to tax under section 85A of the Finance Act 1989, an amount |
| |
equal to the profits is to be carried forward to the next accounting |
| |
period for which the company is charged to tax in respect of its life |
| |
assurance business under the I minus E basis and brought into |
| 10 |
account for that period in accordance with Step 7.” |
| |
3 | In section 431(2) (interpretative provisions relating to insurance companies), |
| |
insert at the appropriate place— |
| |
““the I minus E basis” means the basis under which a company |
| |
carrying on life assurance business is charged to tax on the |
| 15 |
relevant profits (within the meaning of section 88(3) of the |
| |
Finance Act 1989) of that business otherwise than under Case |
| |
| |
4 | For section 432 (and the italic cross-heading before it) substitute— |
| |
| 20 |
431G | Company carrying on life assurance business |
| |
(1) | This section applies in relation to an insurance company which |
| |
carries on life assurance business (whether or not it also carries on |
| |
insurance business of any other kind). |
| |
(2) | Subject as follows, the profits of the life assurance business for any |
| 25 |
accounting period shall be charged to tax under the I minus E basis. |
| |
(3) | Where in the case of an insurance company for an accounting period |
| |
| |
(a) | all of its life assurance business is reinsurance business and |
| |
none of that business is of a type excluded from this |
| 30 |
subsection by regulations made by the Board, or |
| |
(b) | all, or substantially all, of its life assurance business is gross |
| |
| |
| the profits of that business for the accounting period shall be charged |
| |
to tax in accordance with Case I of Schedule D and not otherwise. |
| 35 |
| |
(a) | the profits of the life assurance business of an insurance |
| |
company for any accounting period are charged to tax under |
| |
| |
(b) | had those profits been charged to tax in accordance with Case |
| 40 |
I of Schedule D, a loss would have arisen to the company |
| |
from that business for the period, |
| |
| the loss (after being reduced in accordance with section 434A(2)(a)) |
| |
may be set-off under section 393A or section 403(1). |
| |
|
| |
|