Office of Public Sector Information
SCHEDULE 17 continued
17 (1) Section 432A of ICTA (apportionment of income and gains) is amended as follows.
(2) In subsection (1)—
(a) for “This” substitute “Subject to section 432B, this”,
(b) in paragraph (a), after “income” insert “or losses”, and
(c) in paragraph (b), insert at the end “in accordance with the provisions of the 1992 Act”.
(3) After that subsection insert—
“(1ZA) In subsection (1)(a) above “income” means—
(a) income chargeable under Schedule A in respect of any separate Schedule A businesses treated as carried on by the company under section 432AA,
(b) income chargeable under Schedule A in respect of distributions treated by section 121(1)(a) of the Finance Act 2006 as profits of a Schedule A business carried on by the company,
(c) income chargeable under Case V of Schedule D in respect of any overseas property business treated as carried on by the company under section 432AA,
(d) other income of the company chargeable under Case V of Schedule D,
(e) distributions received by the company from companies resident in the United Kingdom,
(f) credits in respect of any creditor relationships (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the company,
(g) credits in respect of any derivative contracts (within the meaning of Schedule 26 to the Finance Act 2002) of the company,
(h) any income of the company chargeable under Case III of Schedule D in respect of annuities and other annual payments within paragraph (b) of Case III of Schedule D as substituted by section 18(3A),
(i) any credits brought into account by the company under Part 3 of Schedule 29 to the Finance Act 2002 (intangible fixed assets), and
(j) any income of the company chargeable under Case VI of Schedule D, other than profits of the company chargeable under section 436A (gross roll-up business).
(1ZB) In subsection (1)(a) above “losses” means—
(a) losses in respect of any separate Schedule A businesses treated as carried on by the company under section 432AA,
(b) losses in respect of any overseas property businesses treated as carried on by the company under that section,
(c) debits in respect of any creditor relationships (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the company,
(d) debits in respect of any derivative contracts (within the meaning of Schedule 26 to the Finance Act 2002) of the company,
(e) any debits brought into account by the company under Part 2 of Schedule 29 to the Finance Act 2002 (intangible fixed assets), and
(f) any losses of the company computed in the same way as profits chargeable under Case VI of Schedule D, other than any losses of gross roll-up business.
(1ZC) For determining as mentioned in subsection (1) above what parts of income or gains arising from the assets of the company’s long-term insurance fund are referable to PHI business (to the extent that it would not be the case by virtue of subsections (1ZA) and (1ZB))—
(a) “income” also includes profits shown in the technical account, and
(b) “losses” also includes losses so shown.”
(4) In subsection (1A), for “, all of the income and gains or losses referred to in subsection (1) above is” substitute—
“(a) all of the income and losses referred to in paragraph (a) of subsection (1) above, and
(b) all of the gains and losses referred to in paragraph (b) of that subsection,
are”.
(5) In subsection (3), after “Income” insert “or losses”.
(6) After that subsection insert—
“(3A) Amounts falling within—
(a) section 442A,
(b) section 85(2C) of the Finance Act 1989, or
(c) section 85A of that Act,
are directly referable to basic life assurance and general annuity business.”
(7) In subsection (4A), after “Income” insert “or losses”.
(8) In subsection (5), for “income, gains or losses” substitute “income and losses referred to in paragraph (a) of subsection (1) above, and any gains and losses referred to in paragraph (b) of that subsection,”.
(9) In subsection (7)—
(a) in paragraph (a), for “income, gains or losses” substitute “income and losses referred to in paragraph (a) of subsection (1) above, and gains and losses referred to in paragraph (b) of that subsection,” and insert at the end “and”,
(b) in paragraph (b), for “arising from the assets is, and gains or losses accruing on the disposal of the assets are,” substitute “and losses arising from the assets, and gains and losses accruing on the disposal of the assets, are”, and
(c) omit paragraph (c) and the “and” before it.
(10) In consequence of the preceding provisions, omit the provisions specified in sub-paragraph (11).
(11) The provisions mentioned in sub-paragraph (10) are—
(a) section 432AB(2) of ICTA,
(b) section 502H of that Act,
(c) paragraph 3 of Schedule 11 to FA 1996,
(d) paragraph 19(4) of Schedule 12 to FA 1997,
(e) paragraphs 36(1) and (3) and 138(2) and (3) of Schedule 29 to FA 2002,
(f) paragraph 19(4) of Schedule 9 to F(No.2)A 2005, and
(g) paragraphs 13(2) and 44 of Schedule 7, and paragraph 5 of Schedule 8, to FA 2007.
(12) The amendments made by this paragraph have effect in relation to accounting periods beginning on or after 1 January 2008.
18 (1) In section 431 of ICTA (interpretative provisions relating to insurance companies), after subsection (2YA) insert—
“(2YB) “BLAGAB profits”, in relation to an accounting period of an insurance company, means the company’s BLAGAB income and gains for the period reduced (but not below nil) by the company’s BLAGAB deductions for the period.
(2YC) “BLAGAB income and gains”, in relation to an accounting period of an insurance company, means the aggregate of—
(a) income chargeable for the period under Schedule A or Case III, V or VI of Schedule D so far as referable (in accordance with section 432A) to the company’s basic life assurance and general annuity business, and
(b) chargeable gains so far as so referable accruing to the company in the period, but (subject to section 210A of the 1992 Act) after deducting—
(i) any allowable losses so referable and so accruing, and
(ii) so far as they have not been allowed as a deduction from chargeable gains in any previous accounting period, any allowable losses so referable previously accruing to the company.
(2YD) “BLAGAB deductions”, in relation to an accounting period of an insurance company, means the aggregate of—
(a) amounts falling in respect of any non-trading deficits on the company’s loan relationships to be brought into account in the period in accordance with paragraph 4 of Schedule 11 to the Finance Act 1996, and
(b) the expenses deduction given by Step 8 in section 76(7) for the period.”
(2) In section 755A(11C) of that Act (treatment of chargeable profits and creditable tax apportioned to company carrying on life assurance business), omit paragraph (b) and the “and” before it.
(3) In section 85A of FA 1989 (excess adjusted Case I profits), for subsections (6) and (7) substitute—
“(6) “The relevant income” means—
(a) the company’s BLAGAB income and gains for the accounting period and distributions received by the company in the accounting period from companies resident in the United Kingdom so far as referable (in accordance with section 432A of the Taxes Act 1988) to the company’s basic life assurance and general annuity business (but excluding any amount within this section), and
(b) profits of the company chargeable under Case VI of Schedule D under section 436A of the Taxes Act 1988 (gross roll-up business) for the accounting period.”
(4) In section 88 of that Act (meaning of “policy holders' share of profits”), for subsections (3) to (3B) substitute—
“(3) For the purposes of subsection (1) above the relevant profits of a company for an accounting period consist of the aggregate of—
(a) the company’s BLAGAB profits for the period, and
(b) profits of the company chargeable under Case VI of Schedule D under section 436A of the Taxes Act 1988 (gross roll-up business) for the period.”
(5) Omit—
(a) section 89(1B) of FA 1989,
(b) in section 210A(10)(a) of TCGA 1992, “(within the meaning of section 89(1B) of the Finance Act 1989)”,
(c) paragraph 21(2) of Schedule 8 to FA 1995,
(d) paragraph 2(1) of Schedule 11, and paragraph 56 of Schedule 14, to FA 1996,
(e) paragraph 6(1) of Schedule 33 to FA 2003,
(f) in paragraph 9(2) of Schedule 7 to FA 2004, paragraphs (a) to (c) and the words from”; and, in consequence of” to the end, and
(g) paragraphs 58 and 67(2) of Schedule 7, and paragraphs 15(3) and 16(2) of Schedule 8, to FA 2007.
(6) The amendments made by this paragraph have effect in relation to accounting periods beginning on or after 1 January 2008.
19 (1) Chapter 1 of Part 12 of ICTA (insurance companies) is amended as follows.
(2) In section 431(2ZB) and (2ZC) (interpretative provisions), insert “or” at the end of paragraph (b) and omit paragraph (d) and the “or” before it.
(3) In section 432A (apportionment of income and gains), omit—
(a) in subsection (6), paragraph (b) of the definition of A (but not the “and” following it),
(b) in subsection (8), paragraph (b) and the “and” before it, and
(c) subsections (8A) and (8B).
(4) In section 432B (apportionment of receipts brought into account), omit subsections (4) to (12).
(5) The amendments made by this paragraph have effect in relation to periods of account beginning on or after 1 January 2007.
20 In section 431A of ICTA (powers to amend), after subsection (2) insert—
“(2A) The Treasury may by order make provision as to the application of the Corporation Tax Acts in relation to insurance special purpose vehicles.
(2B) An order under subsection (2A) above may in particular contain provision—
(a) making amendments of any provision of the Corporation Tax Acts, or
(b) making provision for the life assurance provisions of the Corporation Tax Acts to have effect in relation to any specified description of insurance special purpose vehicles subject to specified modifications or exceptions.
(2C) An order under subsection (2A) above—
(a) may make provision having effect in relation to accounting periods current when it is made, and
(b) if it is made in consequence of, or otherwise in connection with, provision made by any enactment or instrument, may make provision having effect in relation to the same times as that enactment or instrument.”
21 (1) In section 434A of ICTA (computation of losses and limitation on relief), insert at the end—
“(4) For the purposes of section 403, where the surrendering company is an insurance company which is charged to tax under the I minus E basis in respect of its life assurance business for the surrender period, the company’s gross profits of that period do not include its relevant profits (within the meaning of section 88 of the Finance Act 1989) for that period; and expressions used in this subsection and section 403 have the same meaning here as there.”
(2) The amendment made by sub-paragraph (1) has effect in relation to accounting periods beginning on or after 1 January 2008.
22 (1) In section 434A(3) of ICTA (limitation on relief), after paragraph (a) (before the “or” at the end) insert—
“(aa) (where the company’s life assurance business is not mutual business) in respect of any amount which is a charge on income for the purposes of corporation tax,”.
(2) The amendment made by sub-paragraph (1) has effect in relation to periods of account beginning on or after 1 January 2008 and ending on or after 12 March 2008.
23 (1) Schedule 22 to FA 2001 (remediation of contaminated land) is amended as follows.
(2) In paragraph 14 (entitlement to land remediation tax credit)—
(a) in sub-paragraph (7), omit “or (13)”, “and charges on income” and “and charges”,
(b) in sub-paragraph (8), omit “or (13)”, and
(c) in sub-paragraph (9)—
(i) for “Step 6” substitute “Step 7”, and
(ii) omit “or (13)”, in the first place.
(3) In paragraph 17 (restriction on losses carried forward), omit—
(a) in sub-paragraph (3)(b), “or (13)”, “and charges on income” and “and charges”, and
(b) in sub-paragraph (4), “or (13)”.
(4) In paragraph 21 (provision in respect of I minus E basis), for the words after “where” substitute “an insurance company is charged to tax under the I minus E basis in respect of its life assurance business for any accounting period.”
(5) In paragraph 22(2) (entitlement to relief: I minus E basis), for “is entitled to relief for that accounting period in respect of its qualifying expenditure” substitute “may treat the amount of its qualifying expenditure as expenses payable which fall to be brought into account for that accounting period at Step 1 in section 76(7) of the Taxes Act 1988”.
(6) In paragraph 24 (entitlement to life assurance company tax credit), omit—
(a) in sub-paragraph (3), “or (13)”, in the first place, and
(b) in sub-paragraph (2)(b), “or (13)”, “and charges on income” and “and charges”.
(7) In paragraph 27(1) (restriction on carrying forward expenses payable)—
(a) in paragraph (a), omit “or (13)”, and
(b) in paragraph (b), omit “for the next accounting period”.
(8) The amendments made by this paragraph have effect in relation to accounting periods beginning on or after 1 January 2008.
24 (1) In section 56 of ICTA (transactions in deposits and debts), omit subsection (4) (which relates to section 76(2) computations and is spent).
(2) In consequence of sub-paragraph (1), in section 164 of FA 1996, omit subsection (4) (which amends section 56(4) of ICTA).
25 In section 12AE(2) of TMA 1970 (partnership returns: alternative methods for bringing amounts into charge to tax), for “84(2) or (3)” substitute “84(1)”.
26 (1) Section 431D of ICTA (meaning of “overseas life assurance business”) is amended as follows.
(2) In subsections (2) and (4), for “Board” substitute “Commissioners”.
(3) In subsection (3), for “Board” substitute “Commissioners for Her Majesty’s Revenue and Customs”.
27 (1) In section 476(3) of ITTOIA 2005 (foreign policies), omit—
(a) “as a result of section 431D(1)(a) of ICTA (business with a non-UK resident policy holder)”, and
(b) “as a result of section 431D(1) of ICTA”.
(2) In consequence of sub-paragraph (1), omit paragraph 78 of Schedule 7 to FA 2007.
(3) The amendments made by this paragraph have effect as if they were made by Schedule 7 to FA 2007 (see section 38(2) of that Act).
28 (1) In section 53 of ICTA (farming and market gardening and managing land on commercial basis for profit), insert at the end—
“(5) The preceding provisions of this section do not apply in relation to—
(a) farming or market gardening by an insurance company on land which is an asset of the company’s long-term insurance fund, or
(b) the occupation by an insurance company of land which is such an asset for a purpose other than farming or market gardening.”
(2) In section 55 of ICTA (mines, quarries etc), insert at the end—
“(3) Subsection (1) does not apply in relation to any concern carried on by an insurance company on land which is an asset of the company’s long-term insurance fund.”
(3) In section 432AB(5) (losses from Schedule A business etc), for “section 392A or 392B” substitute “sections 392A and 503, or section 392B,”.
(4) The amendments made by this paragraph have effect in relation to accounting periods beginning on or after 1 January 2008.
29 (1) In paragraph 4(1A) of Schedule 25 to ICTA (controlled foreign companies), for “436, 439B or 441” substitute “436A”.
(2) The amendment made by sub-paragraph (1) has effect in relation to accounting periods beginning on or after 1 January 2008.
30 (1) In section 757 of ICTA (disposals to which Chapter 5 of Part 17 of that Act applies), after subsection (1) insert—
“(1A) But this Chapter does not apply to disposals of assets of an insurance company’s long-term insurance fund.”
(2) The amendment made by sub-paragraph (1) has effect in relation to disposals made in accounting periods beginning on or after 1 January 2008.
31 (1) In section 444AB(6) of ICTA (transfer schemes transferring whole of business), for the words after “means” substitute “the period of account of the transferor ending, or treated by section 444AA(2) as ending, immediately before the transfer date.”
(2) The amendment made by sub-paragraph (1) has effect in relation to transfers of business taking place on or after 1 July 2008.
32 (1) In section 444ABB(1A)(b)(ii) of ICTA (retained assets), for “liabilities” substitute “mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook)”.
(2) The amendment made by sub-paragraph (1) has effect in relation to transfers of business taking place on or after 1 July 2008.
33 (1) In section 444ABD(1) of ICTA (transferor’s period of account including transfer), for “liabilities” substitute “mathematical reserves (as determined in accordance with section 1.2 of the Insurance Prudential Sourcebook)”.
(2) The amendment made by sub-paragraph (1) has effect in relation to transfers of business with a transfer date after 21 March 2007.
34 In section 431(2) of ICTA, in the definition of “periodical return”, insert at the end “(and does not include the Forms mentioned in Rule 9.3(5))”.
35 (1) In ICTA, omit section 737D (power to provide that manufactured payments are to be treated as income eligible for relief under section 438).
(2) In consequence of sub-paragraph (1), omit—
(a) section 83(1) of FA 1995,
(b) section 139(6) of FA 2006, and
(c) paragraph 175 of Schedule 1 to ITA 2007.
36 In paragraph 12 of Schedule 12 to FA 2002 (insurance companies treated as large companies), for the words following paragraph (b) substitute “the company does not qualify as a small or medium-sized enterprise for the purposes of Parts 1 to 3 of this Schedule or Schedule 20 to the Finance Act 2000.”
37 (1) In section 89(7) of FA 1989 (policy holders' share of profits), for “in respect of losses in accordance with section 85A(4)” substitute “in accordance with section 85A(4) in respect of losses incurred in an accounting period in which 31 December 2002 is included or any later accounting period.”
(2) The amendment made by sub-paragraph (1) has effect in relation to accounting periods beginning on or after 1 January 2008 and ending on or after 15 May 2008.
(3) But that amendment does not have effect (and is to be treated as never having had effect) in relation to a company if a relevant determination is made in proceedings commenced by the company before 15 May 2008 and is not reversed on an appeal or further appeal.
(4) A relevant determination is a determination that losses incurred in an accounting period earlier than that in which 31 December 2002 was included are to be taken into account for the purposes of section 89 of FA 1989 in arriving at Case I profits for accounting periods—
(a) beginning on or after 1 January 2003, and
(b) ending on or before 31 December 2006.
38 (1) Paragraph 17 of Schedule 9 to FA 2007 (transfers: commencement) is amended as follows.
(2) In sub-paragraph (2), for “9, 10(3) to (5),” substitute “10(5),”.
(3) In sub-paragraph (3)—
(a) after “effect” insert “(a)”, and
(b) insert at the end “and
(b) in relation to periods of account ending after 30 June 2008 where the transfer of business or demutualisation concerned took place on or after 21 March 2007 and before 1 July 2008.”
(4) After sub-paragraph (4) insert—
“(4A) The amendment made by paragraph 9 has effect in relation to contracts entered into in a period of account beginning on or after 1 January 2008.”
(5) Insert at the end—
“(6) The amendments made by paragraph 10(3) and (4) have effect in relation to assets transferred on or after 1 January 2008.”
39 (1) In article 1(5) of the Insurance Business Transfer Schemes (Amendment of the Corporation Tax Acts) Order 2008 (S.I. 2008/381), for “other” substitute “earlier”.
(2) In article 29(2), for ““assuming the transferor had continued to carry on the business transferred after the transfer”” substitute ““assuming that the transferor had continued to carry on the business transferred””.
(3) The amendments made by this paragraph are to be treated as always having had effect.
40 (1) In section 436A(6) of ICTA (gross roll-up business: separate charge on profits), omit “under subsection (4) above”.
(2) The amendment made by sub-paragraph (1) has effect in relation to periods of account beginning on or after 1 January 2008 and ending on or after 12 March 2008.
41 In section 88(5) of FA 1989 (policy holders' share of profits), omit the words after “January 1990”.
Finance Act 2008