Search Legislation

Finance Act 1989

What Version

 Help about what version

Advanced Features

 Help about advanced features

Changes to legislation:

There are outstanding changes not yet made by the legislation.gov.uk editorial team to Finance Act 1989. Any changes that have already been made by the team appear in the content and are referenced with annotations. Help about Changes to Legislation

Close

Changes to Legislation

Revised legislation carried on this site may not be fully up to date. Changes and effects are recorded by our editorial team in lists which can be found in the ‘Changes to Legislation’ area. Where those effects have yet to be applied to the text of the legislation by the editorial team they are also listed alongside the legislation in the affected provisions. Use the ‘more’ link to open the changes and effects relevant to the provision you are viewing.

Changes and effects yet to be applied to the whole Act associated Parts and Chapters:

 Help about changes and effects
Close

Changes and effects

This section lists the changes and effects yet to be applied to the whole Act, associated Parts and Chapters where applicable. This includes any insertions of whole new Parts, Chapters or provisions yet to be inserted into this Act. These effects are included in this view as they may be (but won’t necessarily be) relevant to the specific provision that you are viewing.

Whole provisions yet to be inserted into this Act (including any effects on those provisions):

Commencement Orders yet to be applied to the Finance Act 1989

 Help about changes and effects
Close

Commencement Orders

This section lists the commencement orders yet to be applied to the whole Act. These effects are included in this view as they may be (but won’t necessarily be) relevant to the specific provision that you are viewing. Where applicable the commencement orders are listed under two headings, firstly those that bring some part of the Act you are viewing into force and secondly, those that bring into force legislation that affects some part of the legislation you are viewing. If you are viewing a prospective version or there is a prospective version available there may be commencement orders listed here that are relevant to the provision you are viewing.

Life assuranceE+W+S+N.I.

82 Calculation of profits.E+W+S+N.I.

(1)Where the profits of an insurance company in respect of its life assurancebusiness are, for the purposes of the Taxes Act 1988, computed in accordancewith the provisions of that Act applicable to Case I of Schedule D, then, incalculating the profits for any period of account,—

(a)there shall be taken into account as an expense (so far as not so takeninto account apart from this section) any amounts which [F1are allocated to, [F2and any amounts of tax F3. . . which are expended on behalf of], policy holders orannuitants in respect of the period]; and

(b)if, at the end of the period, the company has an unappropriated surpluson valuation, as shown in [F4the return deposited with the Financial Services Authority under section 9.6 of the Prudential Sourcebook (Insurers)], then, subject to subsection (3) below,the closing liabilities of the period may include such amount, forming partof that surplus, as is required to meet the reasonable expectations of policyholders or annuitants with regard to bonuses or other additions to benefit ofa discretionary nature.

[F5(1A)In subsection (1)(b) above “the Prudential Sourcebook (Insurers)” means the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000.]

(2)For the purposes of this section an amount is allocated to policy holdersor annuitants if, and only if,—

(a)bonus payments are made to them; or

(b)reversionary bonuses are declared in their favour or a reduction is madein the premiums payable by them;

and the amount of the allocation is, in a case within paragraph (a)above, the amount of the payments and, in a case within paragraph (b) above,the amount of the liabilities assumed by the company in consequence of thedeclaration or reduction.

(3)The amount which, apart from this subsection, would be included in theclosing liabilities of a period of account by virtue of subsection (1)(b)above shall be reduced or, as the case may be, extinguished by deductingtherefrom the total of the amounts which—

(a)for periods of account ending before 14th March 1989 have been excluded,by virtue of section 433 of the Taxes Act 1988, as being reserved for policyholders or annuitants, and

(b)have not before that date either been allocated to or expended on behalfof policy holders or annuitants or been treated as profits of an accountingperiod on ceasing to be so reserved.

(4)Where the closing liabilities of a period of account include an amount byvirtue of subsection (1)(b) above, the like amount shall be included in theopening liabilities of the next following period of account.

(5)This section has effect with respect to periods of account ending on orafter 14th March 1989; and the following provisions of this section shallapply for the purposes of the application of this section to any such periodwhich begins before that date (in this section referred to as a “straddlingperiod”).

(6)For the purposes referred to in subsection (5) above, it shall be assumedthat the straddling period consists of two separate periods of account,—

(a)the first beginning at the beginning of the straddling period and endingon 13th March 1989 (in this section referred to as “the first notionalperiod”); and

(b)the second beginning on 14th March 1989 and ending at the end of thestraddling period (in this section referred to as “the second notionalperiod”);

and any reference in subsection (7) or subsection (8) below to a timeapportionment is a reference to an apportionment made by reference to therespective lengths of the two notional periods.

(7)To determine the profits of the first notional period and the amountexcluded from the profits of that period by virtue of section 433 of the TaxesAct 1988 as being reserved for policy holders or annuitants,—

(a)in the first instance the profits of the straddling period and the amountso excluded from those profits shall be computed as if subsections (1) to (4)above did not apply with respect to any part of the straddling period; and

(b)there shall then be determined that part of the profits and the amountcomputed under paragraph (a) above which, on a time apportionment, is properlyattributable to the first notional period.

(8)To determine the profits of the second notional period,—

(a)in the first instance the profits of the straddling period shall becomputed as if subsections (1) to (4) above applied to the whole of thestraddling period; and

(b)there shall then be determined that part of the profits computed underparagraph (a) above which, on a time apportionment, is properly attributableto the second notional period.

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F1Finance Act 1990 (c. 29) s. 43(1)(3)—deemed always to have had effect. Previously

“, in respect of the period, are allocated to or expended on behalf of policy holders or annuitants”

F2 Words

“any any amounts of tax which are expended on behalf of”

omitted when s.82(1)(2)(4) and s. 83applied to profits chargeable under ScheduleD (see Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1) s. 441 (as amended (28.7.2000 with effect in relation to periods of account beginning on or after 1.4.2000) by 2000 c. 17, s. 103, Sch. 30 para. 18(3)(4))

F3Words in s. 82(1)(a) repealed (28.7.2000 with effect in relation to periods of account beginning on or after 1.4.2000) by 2000 c. 17, ss. 103, 156, Sch. 30 para. 18(2)(4), Sch. 40 Pt. II(13), Note

F4Words in s. 82(1)(b) substituted (1.12.2001 with effect as mentioned in s. 55(4) of the amending S.I.) by S.I. 2001/3629, art. 55(2)

F5S. 82(1A) inserted (1.12.2001 with effect as mentioned in s. 55(4) of the amending S.I.) by S.I. 2001/3629, art. 55(3)

Modifications etc. (not altering text)

C1S. 82 modified (31.7.1992 with effect for accounting periods beginning on and after 1.1.1990) by S.I. 1992/1655, regs. 1, 17

S. 82 modified (23.3.1999 with effect with respect to accounting periods of insurance companies ending on or after 1.7.1999) by S.I. 1999/498, regs. 1, 10

C2S. 82 subs. (1)(2) and (4) and s. 83apply to profits chargeable under Schedule D (see Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 441)

S. 82(1)(2)(4) applied (with modifications) (1.5.1995) by 1988 c. 1, s. 439B(3)(a) (as inserted (1.5.1995) by 1998 c. 36, s. 51, Sch. 8 Pt. I para. 27(1) (with Sch. 8 paras. 55(2), 57(1))

C3 See S.I. 1989/2417, reg. 5 (in PartIII Vol.5)for modification applicable to life or endowment businesscarried on by registered friendly societies (but S.I. 1989/2417 was revoked (31.7.1992) by S.I. 1992/1655, regs. 1, 22 and deemed never to have had effect).

[F683 Receipts to be brought into account.E+W+S+N.I.

(1)The following provisions of this section have effect where the profits of an insurance company in respect of its life assurance business are, for the purposes of the Taxes Act 1988, computed in accordance with the provisions of that Act applicable to Case I of Schedule D.

(2)So far as referable to that business, the following items, as brought into account for a period of account (and not otherwise), shall be taken into account as receipts of the period—

(a)the company’s investment income from the assets of its [F7long-term insurance] fund, and

(b)any increase in value (whether realised or not) of those assets.

If for any period of account there is a reduction in the value referred to in paragraph (b) above (as brought into account for the period), that reduction shall be taken into account as an expense of that period.

[F8(3)In ascertaining whether or to what extent a company has incurred a loss in respect of that business in a case where an amount is added to the company’s [F7long-term insurance] fund as part of or in connection with—

(a)a transfer of business to the company, or

(b)a demutualisation of the company not involving a transfer of business,

that amount shall (subject to subsection (4) below) be taken into account, for the period for which it is brought into account, as an increase in value of the assets of that fund within subsection (2)(b) above.

F8(4)Subsection (3) above does not apply where, or to the extent that, the amount concerned—

(a)would fall to be taken into account as a receipt apart from this section,

(b)is taken into account under subsection (2) above otherwise than by virtue of subsection (3) above, or

(c)is specifically exempted from tax.

F8(5)Any amount which is to be taken into account pursuant to subsection (3) above for a period of account shall be so taken into account—

(a)after the making of any reduction under subsection (6) of section 83AA below in relation to that period, but

(b)before the making of any reduction under subsection (3) of that section in relation to an accounting period of the company ending in or with that period.

F8(6)In subsection (3) above “transfer of business” means—

[F9(a)a transfer, under an insurance business transfer scheme, of business which consists of the effecting or carrying out of contracts of long-term insurance;]

(b)a qualifying overseas transfer, within the meaning of paragraph 4A of Schedule 19AC to the Taxes Act 1988; or

(c)the making of a contract of reinsurance which, in whole or in part, constitutes or forms part of a total reinsurance by the reinsured, unless the reinsurer under the contract falls within section 439A of the Taxes Act 1988 (pure reinsurance).

[F10(6A)In subsection (6)(a) above—

“insurance business transfer scheme” means a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section;

“contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001.]

(7)For the purposes of subsection (3)(a) above, a transfer of business falling within subsection (6)(c) above shall be treated as a transfer of business to the company which is the reinsurer under the contract of reinsurance.

F8(8)In this section—

  • add”, in relation to an amount and a company’s [F11long-term insurance] fund, includes transfer (whether from other assets of the company or otherwise);

    demutualisation” means the conversion, under the law of any territory, of a company which has been carrying on insurance business without having a share capital into a company with a share capital, without any change of legal personality;

    total reinsurance” means the reinsurance (whether effected by a single contract of reinsurance or by two or more such contracts, taken together, whether or not made with the same reinsurer) of the whole, or substantially the whole, of the reinsured’s risk—

(a)under policies of a particular description issued in respect of insurances made in the course of carrying on life assurance business before the making of the contract of reinsurance (or, in a case where there are two or more contracts of reinsurance, the last of them); or

(b)under contracts of a particular description so made.]

This subsection does not apply where, or to the extent that, the amount concerned—

(a)would fall to be taken into account as a receipt apart from this section,

(b)is otherwise taken into account under subsection (2) above, or

(c)is specifically exempted from tax.]

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F6Ss. 83, 83A substituted for s. 83 (1.5.1995) by 1995 c. 4, s. 51, Sch. 8 Pt. I para. 16(1) (with Sch. 8 paras. 55(2), 57(1))

F7Words in s. 83(2)(a)(3) substituted (1.12.2001) by S.I. 2001/329, art. 60(1)(a)

F8S. 83(3)-(8) substituted for s. 83(3) (29.4.1996 with effect as mentioned in Sch. 31 para. 10(2) of the amending Act) by 1996 c. 8, s. 163, Sch. 31 para. 4

F9S. 83(6)(a) substituted (1.12.2001 with effect as mentioned in art. 56(4) of the amending S.I.) by S.I. 2001/3629, art. 56(2)

F10S. 83(6A) inserted (1.12.2001 with effect as mentioned in art. 56(4) of the amending S.I.) by S.I. 2001/3629, art. 56(3)

F11Words in the definition of “add” in s. 83(8) substituted (1.12.2001) by S.I. 2001/3629, art. 60(1)(a)

Modifications etc. (not altering text)

C4S. 83 applied (1.5.1995) by 1988 c. 1, s. 439B(3)(a) (as inserted (1.5.1995) by 1995 c. 4, s. 51, Sch. 8 Pt. I para. 27(1) (with Sch. 8 paras. 55(2), 57(1)))

S. 83 modified (retrospective to 1.1.1995) by S.I. 1997/473, regs. 1(2), 33, 34

C5S. 83(2) applied (1.5.1995) by 1998 c. 1, s. 432E (as amended (1.5.1995) by 1995 c. 4, s. 51, Sch. 8 Pt. I para. 16(3) (with ss. 55(2), 57(1)))

C6S. 83(6) modified (retrospective to 1.1.1996) by S.I. 1997/743, regs. 1(2), 35 (as amended (1.12.2001) by S.I. 2001/3629, arts. 160, 165(1)(b))

[F1283A Meaning of “brought into account”.E+W+S+N.I.

(1)[F13In sections 83 to 83AB]brought into account” means brought into account in an account which is recognised for the purposes of [F14those sections].

(2)Subject to the following provisions of this section and to any regulations made by the Treasury, the accounts recognised for the purposes of [F15those sections] are—

(a)a revenue account prepared for the purposes of [F16Chapter 9 of the Prudential Sourcebook (Insurers)] in respect of the whole of the company’s [F17long-term] business;

(b)any separate revenue account required to be prepared [F18under that Chapter] in respect of a part of that business.

[F19In paragraph (a) [F20above]“the Prudential Sourcebook (Insurers)” means the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000.][F21Paragraph (b) above does not include accounts required in respect of internal linked funds.]

(3)Where there are prepared any such separate accounts as are mentioned in subsection (2)(b) above, reference shall be made to those accounts rather than to the account for the whole of the business.

(4)If in any such case the total of the items brought into account in the separate accounts is not equal to the total amount brought into account in the account prepared for the whole business, there shall be treated as having been required and prepared a further separate revenue account covering the balance.

F22(5). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F12SS. 83, 83A substituted for s. 83 (1.5.1995) by 1995 c. 4, s. 51, Sch. 8 Pt. I para. 16(1) (with Sch. 8 paras. 55(2), 57(1))

F13Words in s. 83A(1) substituted (29.4.1996 with effect as mentioned in Sch. 31 para. 10(2) of the amending Act) by 1996 c. 8, s. 163, Sch. 31 para. 6(1)(a)

F14Words in s. 83A(1) substituted (29.4.1996 with effect as mentioned in Sch. 31 para. 10(2) of the amending Act) by 1996 c. 8, s. 163, Sch. 31 para. 6(1)(b)

F15Words in s. 83A(2) substituted (29.4.1996 with effect as mentioned in Sch. 31 para. 10(2) of the amending Act) by 1996 c. 8, s. 163, Sch. 31 para. 6(2)

F16Words in s. 83A(2)(a) substituted (1.12.2001 with effect as mentioned in art. 57(2) of the amending Act) by S.I. 2001/3629, art. 57(1)(a)

F17Words in s. 83A(2)(a) substituted (1.12.2001) by S.I. 2001/3629, art. 60(2)(a)

F18Words in s. 83A(2)(b) substituted (1.12.2001 with effect as mentioned in art. 57(2) of the amending Act) by S.I. 2001/3629, art. 57(1)(b)

F19Words in s. 83A(2) substituted (1.12.2001 with effect as mentioned in art. 57(2) of the amending S.I.) by S.I. 2001/3629, art. 57(1)(c)

F20Word in s. 83A(2) inserted (2.7.2002) by S.I. 2002/1409, art. 3(a)

F21Words in s. 83A(2) added (2.7.2002) by S.I. 2002/1409, art. 3(b)

F22S. 83A(5) repealed (1.1.1996) by 1996 c. 8, s. 205, Sch. 41 Pt. V(26), note

Modifications etc. (not altering text)

C7S. 83A modified (retrospective to 1.1.1995) by S.I. 1997/473, regs. 1(2), 36, 37

[F2383AA Amounts added to [F24long term insurance] fund of a company in excess of that company’s loss.E+W+S+N.I.

(1)If one or more relevant amounts are brought into account for a period of account of a company and either—

(a)the aggregate of those amounts exceeds the loss which, after the making of any reduction under subsection (6) below but before any application of section 83(3) above in relation to that period, would have arisen to the company in that period in respect of its life assurance business, or

(b)no such loss would have so arisen,

the surplus for that period shall be applied in accordance with the following provisions of this section and section 83AB below.

(2)In this section—

  • relevant amount” means so much of any amount which is added to the [F25long-term insurance] fund of a company as mentioned in subsection (3) of section 83 above as does not fall within any of the paragraphs of subsection (4) of that section;

    surplus”, in relation to a period of account of a company, means (subject to section 83AB(2) below)—

(a)if the aggregate of the relevant amounts brought into account for that period exceeds the amount of any loss which, after the making of any reduction under subsection (6) below but before any application of section 83(3) above in relation to that period, would have arisen to the company in that period in respect of its life assurance business, the amount of the excess; or

(b)if no such loss would have so arisen, the aggregate of the relevant amounts brought into account for that period.

(3)Where, apart from section 83AB(2) below, there is a surplus for a period of account of a company for which there are brought into account one or more relevant amounts which were added to the company’s [F24long-term insurance] fund as part of, or in connection with, a particular transfer of business, the appropriate portion of the surplus for that period shall be treated as reducing (but not below nil) so much of any loss arising to the transferor company in the relevant accounting period as, on a just and reasonable apportionment of the loss, is referable to the business which is the subject of that particular transfer.

(4)For the purposes of subsection (3) above, the appropriate portion of the surplus for a period of account of a company is, in the case of any particular transfer of business, the amount which bears to that surplus (apart from any additions by virtue of section 83AB(2) below) the proportion which A bears to B, where—

  • A is the aggregate of such of the relevant amounts added to the company’s [F24long-term insurance] fund as part of, or in connection with, that particular transfer of business as are brought into account for that period, and

  • B is the aggregate of the relevant amounts brought into account for that period.

(5)Any reduction pursuant to subsection (3) above of the loss arising to the transferor company in the relevant accounting period shall be made after—

(a)the making of any reduction under subsection (6) below, and

(b)any application of section 83(3) above,

in relation to the period of account of that company in which falls the date of the particular transfer of business in question.

(6)Any loss arising to a company in respect of its life assurance business in a period of account subsequent to one for which there is a surplus shall be reduced (but not below nil) by so much of that surplus as cannot be applied—

(a)under subsection (3) above;

(b)under this subsection, in the reduction of a loss arising to the company in an earlier period of account; or

(c)under section 83AB below, in relation to a transfer of business from the company in that or any earlier period of account.

(7)Any reduction pursuant to subsection (6) above of a loss arising to a company in a period of account shall be made—

(a)before any application of section 83(3) above in relation to that period, and

(b)if the company is also the transferor company in relation to a particular transfer of business, before the making of any reduction under subsection (3) above in relation to that one of its accounting periods which is the relevant accounting period in relation to that transfer.

(8)A surplus in respect of an earlier period of account shall be applied under subsection (6) above before a surplus in respect of a later period of account.

(9)All such adjustments to the liability to tax of any person shall be made, whether by assessment or otherwise, as may be required to give effect to this section.

(10)In this section—

  • add” has the same meaning as in section 83 above;

    the relevant accounting period” means the accounting period of the transferor company which—

(a)ends on the date of the transfer of business mentioned in subsection (3) above, or

(b)if that transfer of business falls within section 83(6)(c) above and no accounting period of the transferor company ends on that date, ends next after that date;

  • transfer of business” has the same meaning as in section 83(3) above;

    the transferor company” means the company from which the transfer of business mentioned in subsection (3) above is effected.

(11)A transfer of business falling within section 83(6)(c) above shall be treated for the purposes of this section as a transfer of business from the company which is the reinsured under the contract of reinsurance.]

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F23Ss. 83AA, 83AB inserted (29.4.1996 with effect as mentioned in Sch. 31 paras. 9(1), 10(2) of the amending Act) by 1996 c. 8, s. 163, Sch. 31 para. 5

F24Words in s. 83AA(3)(4) and the sidenote substituted (1.12.2001) by S.I. 2001/3629, art. 60(1)(b)

F25Words in the definition of “relevant amount” in s. 83AA(2) substituted (1.12.2001) by S.I. 2001/3629, art. 60(1)(b)

Modifications etc. (not altering text)

C8S. 83AA modified (29.4.1996) by 1996 c. 8, s. 163, Sch. 31 para. 9(1)

C9S. 83AA restricted (29.4.1996) by 1996 c. 8, s. 163, Sch. 31 para. 9(3)

[F2683AB Treatment of surplus where there is a subsequent transfer of business from the company etc.E+W+S+N.I.

(1)If an amount is added to the [F27long-term insurance] fund of a company as part of or in connection with a transfer of business to the company, or a demutualisation of the company not involving a transfer of business, and—

(a)there is a surplus for the period of account of the company for which that amount is brought into account,

(b)at any time after the transfer of business or demutualisation, there is a transfer of business from the company (the “subsequent transfer”), and

(c)at the end of the relevant period of account there remains at least some of the surplus mentioned in paragraph (a) above which cannot be applied—

(i)under subsection (3) of section 83AA above,

(ii)under subsection (6) of that section, in the reduction of a loss arising to the company in an earlier period of account, or

(iii)under this section, in relation to an earlier subsequent transfer,

so much of the surplus falling within paragraph (c) above as, on a just and reasonable apportionment, is referable to business which is the subject of the subsequent transfer shall be applied under this section.

(2)An amount of surplus which is to be applied under this section shall be so applied by being treated as an amount of surplus (additional to any other amounts of surplus) for the period of account of the transferee company which last precedes the period of account of that company in which the subsequent transfer is effected, whether or not there is in fact any such preceding period of account.

(3)If, in a case where an amount is treated under subsection (2) above as an amount of surplus for a period of account of a company, the period is not one for which there is brought into account an amount added to the company’s [F27long-term insurance] fund in connection with the subsequent transfer, subsection (1) above shall have effect in relation to any transfer of business from the company subsequent to that transfer as if an amount had been so added and had been brought into account for that period.

(4)Any question as to what is a just and reasonable apportionment in any case for the purposes of subsection (1) above shall be determined by the Special Commissioners who shall determine the question in the same manner as they determine appeals; but any person affected by the apportionment shall be entitled to appear and be heard or make representations in writing.

(5)A surplus in respect of an earlier period of account shall be applied under this section before a surplus in respect of a later period of account.

(6)All such adjustments to the liability to tax of any person shall be made, whether by assessment or otherwise, as may be required to give effect to this section.

(7)In this section—

  • add” has the same meaning as in section 83 above;

    demutualisation” has the same meaning as in section 83 above;

    the relevant period of account” means the period of account of the company from which the subsequent transfer is effected which consists of or includes the accounting period of that company which—

(a)ends with the day on which the subsequent transfer is effected; or

(b)if the subsequent transfer is a transfer of business falling within section 83(6)(c) above and no accounting period of the company ends on that day, ends next after that day;

  • surplus” has the same meaning as in section 83AA above;

  • transfer of business” has the same meaning as in section 83(3) above;

  • transferee company” means the company to which the subsequent transfer of business is effected.

(8)Where it is necessary for any purpose of this section to identify the time at which a demutualisation of a company takes place, that time shall be taken to be the time when the company first issues shares.

(9)A transfer of business falling within section 83(6)(c) above shall be treated for the purposes of this section as a transfer of business from the company which is the reinsured under the contract of reinsurance to the company which is the reinsurer under that contract.]

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F26SS. 83AA, 83AB inserted (29.4.1996 with effect as mentioned in Sch. 31 paras. 9(1), 10(2) of the amending Act) by 1996 c. 8, s. 163, Sch. 31 para. 5

F27Words in s. 83AB(1)(3) substituted (1.12.2001) by S.I. 2001/3629, art. 60(1)(c)

Modifications etc. (not altering text)

C10S. 83AB modified (29.4.1996) by 1996 c. 8, s. 163, Sch. 31 para. 9(1)

84 Interpretation of sections 85 to 89 and further provisions about insurancecompanies.E+W+S+N.I.

[F28(1)In sections 85 to 89 below “basic life assurance and general annuity business” has the same meaning as in Chapter I of Part XII of the Taxes Act 1988.]

(2)Any reference in the sections referred to in subsection (1) above or thefollowing provisions of this section to a straddling period is a reference toan accounting period which begins before 1st January 1990 and ends on or afterthat date.

(3)For the purposes of the sections referred to in subsection (1) above andfor the purposes of subsection (5)(b) below it shall be assumed that astraddling period consists of two separate accounting periods—

(a)the first beginning at the beginning of the straddling period and endingon 31st December 1989; and

(b)the second beginning on 1st January 1990 and ending at the end of the straddling period;

and in those sections and subsection (5)(b) below the first of those twonotional accounting periods is referred to as “the 1989 component period”and the second is referred to as “the 1990 component period”.

(4)Chapter I of Part XII of the Taxes Act 1988 (insurance companies) shallhave effect subject to the amendments in Schedule 8 to this Act, being—

(a)amendments relating to franked investment income, loss relief and grouprelief; and

(b)amendments consequential on or supplemental to sections 82 and 83 aboveand sections 85 to 89 below.

(5)Subject to subsection (6) below, in Schedule 8 to this Act,—

(a)paragraphs 2 and 6 shall be deemed to have come into force on 14th March1989; and

(b)the remainder shall have effect with respect to accounting periodsbeginning on or after 1st January 1990 (including the 1990 component period).

(6)Nothing in subsection (5) above affects the operation, by virtue of anyprovision of sections 82 and 83 above and sections 85 to 89 below, of anyenactment repealed or amended by Schedule 8 to this Act and, so long as theprovisions of that Schedule do not have effect in relation to sections 434 and435 of the Taxes Act 1988, nothing in subsection (5)(a) above affects thecontinuing operation of section 433 of that Act for the purpose only ofdetermining the fraction of the profits referred to in subsection (6) ofsection 434 and subsection (1)(b) of section 435.

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F28S. 84(1) substituted(for accounting periods beginning on or after 01.01.1992) by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 paras.11, 18

85 Charge of certain receipts of basic life assurance business.E+W+S+N.I.

(1)Subject to subsection (2) below, where the profits of an insurance companyin respect of its life assurance business are not charged under Case I ofSchedule D, there shall be chargeable under Case VI of that Schedule anyreceipts referable to the company’s [F29basic life assurance and general annuity business]

(a)which, if those profits were charged under Case I of Schedule D, would betaken into account in computing those profits; and

(b)which would not be within the charge to tax (except under Case I ofSchedule D) apart from this section;

and for the purposes of paragraph (a) above, the provisions of section83 above as to the manner in which any item is to be taken into account shallbe disregarded.

(2)The receipts referred to in subsection (1) above do not include—

(a)any premium; or

(b)any sum received by virtue of a claim under an insurance contract(including a re-insurance contract); or

(c)any repayment or refund (in whole or in part) of a sum disbursed by thecompany as acquisition expenses falling within paragraphs (a) to (c) ofsubsection (1) of section 86 below; or

[F30(ca)any reinsurance commission; or]

(d)any sum which is taken into account under section 76(1)(a) of the TaxesAct 1988 as a deduction from the amount treated as expenses of management ofthe company; or

(e)any sum which is not within the charge to tax (except under Case I ofSchedule D) because of an exemption from tax.

(3)This section has effect with respect to the receipts of accounting periodsbeginning on or after 1st January 1990 (including the 1990 component period).

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F29Words in s. 85(1) substituted(for accounting periods beginning on or after 01.01.1992) by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 paras.12, 18.

F30Finance Act 1990 (c. 29), s. 44(1)(4)deemedalways to have had effect

Modifications etc. (not altering text)

C11S. 85(1) modified (retrospective to 1.1.1995) by S.I. 1997/473, regs. 1(2), 38

86 Spreading of relief for acquisition expenses.E+W+S+N.I.

(1)For the purposes of this section, the acquisition expenses for any periodof an insurance company carrying on life assurance business are such of thefollowing expenses of management as are for that period attributable to thecompany’s [F31basic life assurance and general annuity business],—

(a)commissions (however described), other than commissions [F32for persons who collect premiums from house to house],

(b)any other expenses of management which are disbursed solely for thepurpose of the acquisition of business, and

(c)so much of any other expenses of management which are disbursed partly forthe purpose of the acquisition of business and partly for other purposes asare properly attributable to the acquisition of business,

[F33reduced by the items specified in subsection (1A) below.]

[F34(1A)Those items are—

(a)the appropriate portion of any deduction falling to be made under paragraph (aa) of subsection (1) of section 76 of the Taxes Act 1988 for the period in question;

(b)any such repayments or refunds falling within paragraph (c) of that subsection as are received in that period;

(c)any reinsurance commissions falling within paragraph (ca) of that subsection.

(1B)For the purposes of paragraph (a) of subsection (1A) above, “the appropriate portion” of the deduction there mentioned is the amount which bears to the whole of that deduction the proportion which the acquisition expenses, without making the reduction required by subsection (1) above, would bear to the whole of the expenses of management, without making the deductions required by paragraphs (aa), (a), (c) and (ca) of section 76(1) of the Taxes Act 1988.]

(2)The exclusion from paragraph (a) of subsection (1) above of commissions [F35for persons who collect premiums from house to house] shall not prevent suchcommissions constituting expenses of management for the purposes of paragraph(b) or paragraph (c) of that subsection.

(3)Nothing in subsections (1) and (2) above applies to commissions (howeverdescribed) in respect of insurances made before 14th March 1989, but withoutprejudice to the application of those subsections to any commissionattributable to a variation on or after that date in a policy issued inrespect of an insurance made before that date; and, for this purpose, theexercise of any rights conferred by a policy shall be regarded as a variationof it.

[F36(3A)Nothing in subsection (1), (2) or (3) above applies to commissions (however described) in respect of annuity contracts made in accounting periods beginning before 1st January 1992, but without prejudice to the application of subsections (1) and (2) above to any commission attributable to a variation, in an accounting period beginning on or after that date, of an annuity contract so made; and for this purpose the exercise of any rights conferred by an annuity contract shall be regarded as a variation of it.]

(4)In subsection (1) above “the acquisition of business”includes

[F37(a)]the securing on or after 14th March 1989 of the payment of increased or additional premiums in respect of a policy of insurance issued in respectof an insurance already made (whether before, on or after that date) [F38and

(b)the securing, in an accounting period beginning on or after 1st January 1992, of the payment of increased or additional consideration in respect of an annuity contract already made (whether in an accounting period beginning before, or on or after, that date)].

(5)In relation to any period, the expenses of management attributable to acompany’s [F31basic life assurance and general annuity business] are expenses—

(a)which are disbursed for that period (disregarding any treated as sodisbursed by section 75(3) of the Taxes Act 1988); and

(b)which, disregarding subsection (6) below, are deductible as expenses ofmanagement in accordance with sections 75 and 76 of the Taxes Act 1988.

[F39(5A)References in this section to expenses of management do not include any amounts treated as additional expenses of management [F40under section 256(2)(a) of the Capital Allowances Act (giving effect to capital allowances referable to basic life assurance and general annuity business of company carrying on life assurance business)].]

(6)Notwithstanding anything in sections 75 and 76 of the Taxes Act 1988 butsubject to subsection (7) below, only one-seventh of the acquisition expensesfor any accounting period (in this section referred to as “the baseperiod”) shall be treated as deductible under those sections for thebase period, and in subsections (8) and (9) below any reference to the fullamount of the acquisition expenses for the base period is a reference to theamount of those expenses which would be deductible for that period apart fromthis subsection.

(7)In the case of the acquisition expenses for an accounting period or partof an accounting period falling wholly within 1990, subsection (6) above shallhave effect as if for “one-seventh” there were substituted “five-sevenths”; and, in the case of the acquisition expenses for anaccounting period or part of an accounting period falling wholly within 1991,1992 or 1993, the corresponding substitution shall be “four-sevenths”, “three-sevenths” or “two-sevenths” respectively.

(8)Where, by virtue of subsection (6) (and, where appropriate, subsection(7)) above, only a fraction of the full amount of the acquisition expenses forthe base period is deductible under sections 75 and 76 of the Taxes Act 1988for that period, then, subject to subsection (9) below, a further one-seventhof the full amount shall be so deductible for each succeeding accountingperiod after the base period until the whole of the full amount has become sodeductible, except that, for any accounting period of less than a year, thefraction of one-seventh shall be proportionately reduced.

(9)For any accounting period for which the fraction of the full amount of theacquisition expenses for the base period which would otherwise be deductiblein accordance with subsection (8) above exceeds the balance of those expenseswhich has not become deductible for earlier accounting periods, only thatbalance shall be deductible.

(10)This section has effect for accounting periods beginning on or after 1stJanuary 1990 (including the 1990 component period).

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F31Words in s. 86(1) and (5) substituted(for accounting periods beginning on or after 01.01.1992) by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 paras. 13(1), 18.

F32Words in s. 86(1)(a) substituted (29.4.1996 with effect in relation to accounting periods beginning on or after 1.1.1996) by 1996 c. 8, s. 167(3)(a)(10)

F33Words in s. 86(1) substituted (29.4.1996 with effect as mentioned in Sch. 31 para. 10(1)) by 1996 c. 8, s. 163, Sch. 31 para. 3(1)

F34S. 86(1A)(1B) inserted (29.4.1996 with effect as mentioned in Sch. 31 para. 10(1))) by 1996 c. 8, s. 163, Sch. 31 para. 3(2)

F35Words in s. 86(2) substituted (29.4.1996 with effect in relation to accounting periods beginning on or after 1.1.1996) by 1996 c. 8, s. 167(3)(b)(10)

F36S. 86(3A) inserted(for accounting periods beginning on or after 01.01.1992) by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 paras. 13(2), 18.

F37S. 86(4)"(a)" inserted(for accounting periods beginning on or after 01.01.1992) by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 paras. 13(3), 18.

F38S. 86(4)(b) and word preceding it inserted(for accounting periods beginning on or after 01.01.1992) by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 paras. 13(3), 18.

F40Words in s. 86(5A) substituted (22.3.2001 with effect as mentioned in s. 579(1) of the amending Act) by 2001 c. 2, s. 578, Sch. 2 para. 70

Modifications etc. (not altering text)

C12S. 86 modified (retrospective to 1.1.1995) by S.I. 1997/473, regs. 1(2), 39

87 Management expenses.E+W+S+N.I.

(1)Section 76 of the Taxes Act 1988 shall be amended in accordance withsubsections (2) and (3) below.

(2)In subsection (1), after paragraph (b) there shall be inserted and

(c)there shall be deducted from the amount treated as the expenses ofmanagement for any accounting period any repayment or refund (in whole or inpart) of a sum disbursed by the company (for that or any earlier period) asacquisition expenses; and

(d)the amount treated as expenses of management shall not include any amountin respect of expenses referable to general annuity business or pensionbusiness; and

(e)the amount of profits from which expenses of management may be deductedfor any accounting period shall not exceed the net income and gains of thataccounting period referable to basic life assurance business;

and for this purpose “net income and gains” means incomeand gains after deducting any reliefs or exemptions which fall to be appliedbefore taking account of this section.

F41(3). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4)In consequence of the amendment made by subsection (2) above, section436(3)(b) of the Taxes Act 1988 (no deduction of expenses of management incertain cases) shall cease to have effect.

(5)This section has effect with respect to accounting periods beginning onor after 1st January 1990; and, in relation to a straddling period, sections75, 76 and 436 of the Taxes Act 1988—

(a)shall have effect in relation to the 1989 component period without regardto the amendments made by subsections (2) to (4) above; and

(b)shall have effect in relation to the 1990 component period as amended bythose subsections.

(6)If, for the 1989 component period, there is an amount of expenses ofmanagement available to be carried forward to the 1990 component period undersection 75(3)(a) of the Taxes Act 1988 (as applied by section 76thereof),—

(a)that amount shall form a pool to which the following provisions of thissection shall apply and to which section 75(3)(b) of that Act (in thissubsection referred to as “the carry-forward provision”)shall apply only to the extent specified in paragraph (c) below;

(b)if, for the 1990 component period or any subsequent accounting period, theamount which (disregarding the pool) may be deducted in respect of expensesof management is less than the amount of the profits from which, disregardingsection 76(1)(e) of that Act (as set out in subsection (2) above), theexpenses of management are deductible, paragraph (c) below shall apply forthat period; and in that paragraph the difference between the amount which maybe so deducted and that amount of profits is referred to as “thepotential deficiency” for the period;

(c)where this paragraph applies for an accounting period (including the 1990component period) the carry-forward provision shall be taken to have hadeffect to carry forward to the accounting period (as if disbursed as expensesfor that period) so much of the pool as does not exceed the potentialdeficiency for the period and is permitted under section 76(2) of the TaxesAct 1988; and the amount of the pool shall be reduced accordingly.

(7)In the case of a company which has an accounting period beginning on 1stJanuary 1990, subsection (6) above shall apply as if—

(a)any reference therein to the 1989 component period were a reference to theaccounting period ending on 31st December 1989; and

(b)any reference therein to the 1990 component period were a reference to theaccounting period beginning on 1st January 1990.

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

88 Corporation tax: policy holders’ fraction of profits.E+W+S+N.I.

(1)Subject to subsection (2) [F42and section 88A] below, in the case of a company carrying on lifeassurance business, the rate of corporation tax chargeable for any financialyear on

[F43(a)the policy holders’ share of the relevant profits for any accountingperiod, or

(b)where the business is mutual business, the whole of those profits,

shall] be deemed to be the rate at which income tax at the basic rate ischarged for the year of assessment which begins on 6th April in the financialyear concerned.

(2)Subsection (1) above does not apply in relation to profits charged underCase I of Schedule D.

[F44(3)For the purposes of subsection (1) above, the relevant profits of a company for an accounting period are the income and gains of the company’s life assurance business reduced by the aggregate amount of—

[F45(aa)amounts falling in respect of any non-trading deficits on the company’s loan relationships to be brought into account in that period in accordance with paragraph 4 of Schedule 11 to the Finance Act 1996,]

(a)expenses of management falling to be deducted under section 76 of the Taxes Act 1988, and

(b)charges on income,

so far as referable to the company’s life assurance business.]

(4)In determining for the purposes of section 13 of the Taxes Act 1988 (smallcompanies’ relief) the profits and basic profits (within the meaning of thatsection) of an accounting period of a company carrying on life assurancebusiness, the policy holders’ [F46share] of the company’s relevant profits for that period [F47, or where the business is mutual business the whole ofthose profits,] shall be left out of account.

(5)This section has effect with respect to the profits of a company foraccounting periods beginning on or after 1st January 1990 (including the 1990component period); and, for this purpose, the profits of the 1990 componentperiod shall be taken to be that portion of the profits of the straddlingperiod which the length of the 1990 component period bears to the length ofthe straddling period.

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F42Words in s. 88(1) inserted (29.4.1996 with effect for the financial year 1996 and subsequent financial years) by 1996 c. 8, s. 73(4), Sch. 6 para. 26(1)(4)

F43Finance Act 1990 (c. 29), s. 45(1)(10)deemedalways to have had effect. Previously

“the policy holders' fractionof its relevant profits for any accounting period shall”

F45S. 88(3)(aa) inserted (29.4.1996) by 1996 c. 8, s. 104, Sch. 14 para. 56 (with savings in Ch. II, ss. 80-105 of Pt. IV)

F46Finance Act 1990 (c. 29), s. 45(2)(10)deemedalways to have had effect. Previously

“fraction”

F47Finance Act 1990 (c. 29), s. 45(2)(10)deemedalways to have had effect

[F4888A Lower corporation tax rate on certain insurance company profits.E+W+S+N.I.

(1)Subject to subsection (2) below, in the case of a company carrying on basic life assurance and general annuity business, the rate of corporation tax chargeable for any financial year on so much of the company’s BLAGAB profits for any accounting period as represents the company’s lower rate income for the period shall be deemed to be the rate at which income tax at the lower rate is charged for the year of assessment which begins on 6th April in the financial year concerned.

(2)Subsection (1) above does not apply in relation to profits charged under Case I of Schedule D.

(3)In this section, references to a company’s lower rate income for any accounting period are references to so much of the income and gains of its basic life assurance and general annuity business for the period as consists in income of any of the following descriptions—

(a)income falling within paragraph (a) of Case III of Schedule D, as that Case applies for the purposes of corporation tax;

(b)purchased life annuities to which section 656 of the Taxes Act 1988 applies or to which that section would apply but for section 657(2)(a) of that Act;

(c)any such dividends or other distributions of a company not resident in the United Kingdom as would be chargeable under Schedule F if the company were resident in the United Kingdom;

(d)so much of—

(i)any dividend distribution (within the meaning of section 468J of the Taxes Act 1988), [F49or]

[F50(ii)any foreign income distribution (within the meaning of section 468K of that Act),]

as is deemed by subsection (2) of section 468Q of that Act [F51(or by that subsection as applied by section 468R(2) of that Act)] to be an annual payment.

(4)Where for any period—

(a)an insurance company’s basic life assurance and general annuity business is mutual business,

(b)the policy holders’ share of the company’s relevant profits is equal to all those profits, or

(c)the policy holders’ share of the company’s relevant profits is more than the company’s BLAGAB profits,

the amount to be taken for the purposes of this section as the amount of the company’s BLAGAB profits for that period representing its lower rate income for that period shall be the amount equal to the applicable proportion of its BLAGAB profits.

(5)Where subsection (4) above does not apply in the case of an insurance company for any period, the amount to be taken for the purposes of this section as the amount of the company’s BLAGAB profits for the period representing its lower rate income for that period shall be the amount produced by multiplying the following, that is to say—

(a)the applicable proportion of those profits; and

(b)the fraction given by dividing the policy holders’ share of the relevant profits of the company for the period by its BLAGAB profits for that period.

(6)For the purposes of this section the applicable proportion of a company’s BLAGAB profits for any period is the amount which bears the same proportion to those profits as the aggregate amount of the company’s lower rate income for that period bears to the total income and gains for that period of the company’s basic life assurance and general annuity business.

(7)For the purposes of this section, the BLAGAB profits of a company for an accounting period are the income and gains of the company’s basic life assurance and general annuity business reduced by the aggregate amount of—

(a)any non-trading deficit on the company’s loan relationships,

(b)expenses of management falling to be deducted under section 76 of the Taxes Act 1988, and

(c)charges on income,

so far as referable to the company’s basic life assurance and general annuity business.

(8)Section 88(3) above applies for the purposes of this section as it applies for the purposes of section 88(1) above.]

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F48S. 88A inserted (29.4.1996 with effect for the financial year 1996 and subsequent financial years) by 1996 c. 8, s. 73, Sch. 6 paras. 26(2)(4)

F49Word in s. 88A(3)(d)(i) repealed (31.7.1997 with effect in relation to distributions made on or after 6.4.1999) by 1997 c. 58, ss. 36(4), 52, Sch. 8 Pt. II(11), note

F50S. 88A(3)(d)(ii) repealed (31.7.1997 with effect in relation to distributions made on or after 6.4.1999) by 1997 c. 58, ss. 36(4), 52, Sch. 6 para. 18(1)(a)(2), Sch. 8 Pt. II(11), note

F51Words in s. 88A(3) repealed (31.7.1997 with effect in relation to distributions made on or after 6.4.1999) by 1997 c. 58, ss. 36(4), 52, Sch. 6 para. 18(1)(b)(2), Sch. 8 Pt. II(11), note

Modifications etc. (not altering text)

C13S. 88A modified (retrospective to 1.1.1996) by S.I. 1997/473, regs. 1(2), 40

[F5289 Policy holders’ share of profits.E+W+S+N.I.

(1)The references in [F53sections 88 and 88A] above to the policy holders’ share of the relevant profits for an accounting period of a company carrying on life assurance business [F54or, as the case may be, basic life assurance and general annuity business] are references to the amount arrived at by deducting from those profits the Case I profits of the company for the period in respect of [F55its life assurance business], reduced in accordance with subsection (2) below.

(2)For the purposes of subsection (1) above, the Case I profits for a periodshall be reduced by—

F56(a). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(b)the shareholders’ share of any F57. . . franked investment incomearising in the period [F58which is referable to the company’s basic life assurance and general annuity business][F59, and

(c)the shareholders’ share of any foreign income dividends arising to the company in the period [F60which are referable to the company’s basic life assurance and general annuity business].]

[F61(2A)For the purposes of subsection (2) above—

(a)foreign income dividends” shall be construed in accordance with Chapter VA of Part VI;

(b)the shareholders’ share of any foreign income dividends is so much of the income they represent as is the shareholders’ share.]

(3)For the purposes of thos section “the shareholders’share” in relation to any income is so much of the income as isrepresented by the fraction

where—

  • A is an amount equal to the Case I profits of the company for the periodin question in respect of its life assurance business, and

  • B is an amount equal to the excess of the company’s relevant non-premiumincome and relevant gains over its relevant expenses and relevant interest forthe period.

(4)Where there is no such excess as is mentioned in subsection (3) above, orwhere the Case I profits are greater than any excess, the whole of the incomeshall be the shareholders’ share; and (subject to that) where there are noCase I profits, none of the income shall be the shareholders’ share.

(5)In subsection (3) above the references to the relevant non-premium income,relevant gains, relevant expenses and relevant interest of a company for anaccounting period are references respectively to the following items asbrought into account for the period, so far as referable to the company’s lifeassurance business,—

(a)the company’s investment income from the assets of its long-term [F62insurance]fund together with its other income, apart from premiums;

(b)any increase in the value (whether realised or not) of those assets;

(c)expenses payable by the company;

(d)interest payable by the company;

and if for any period there is a reduction in the value referred to inparagraph (b) above (as brought into account for the period), that reductionshall be taken into account as an expense of the period.

(6)Except in so far as regulations made by the Treasury otherwise provide,in this section “brought into account” means brought intoaccount in the revenue account prepared for the purposes of [F63Chapter 9 of the Prudential Sourcebook (Insurers)]; and where the company’s period of account does not coincidewith the accounting period, any reference to an amount brought into accountfor the accounting period is a reference to the corresponding amount broughtinto account for the period of account in which the accounting period iscomprised, proportionately reduced to reflect the length of the accountingperiod as compared with the length of the period of account.

[F64(7)In this section—

“Case I profits” means profits computed in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D;

“the Prudential Sourcebook (Insurers)” means the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000.]

(8). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F52Finance Act 1990 (c. 29), s. 45(3).Previously

“Shareholders' and policy holders' fractions.89.– (1) Inrelation to an accounting period of an insurance company carrying on lifeassurance business, any reference to the shareholders' fraction or the policyholders' fraction is a reference to the appropriate fraction determined,subject to subsections (7) and (8) below, by the formulae in subsection (2)below. (2) The formulae referred to in subsection (1) above are–(a) forthe shareholders' fraction, A/A+B and (b) for the policy holders' fraction,B/A+B, where “A” and “B” are determined in accordance with thefollowing provisions of this section. (3)In the formulae in subsection (2)above “A” is the profits of the company for the accounting period inrespect of its life assurance business, computed in accordance with theprovisions of the Taxes Act 1988 applicable to Case I of Schedule D, and, ifthere are no such profits (or there is a loss), “A” is zero. (4) Subjectto subsection (6) below, in those formulae “B” is such a sum as, afterdeduction of corporation tax at the rate provided for by subsection (1) ofsection 88 above in relation to the policy holders' fraction of the company'srelevant profits for the accounting period (within the meaning of thatsubsection), is equal to the excess (if any) for the corresponding period ofaccount of— (a) the aggregate of— (i) the closing liabilities topolicy holders referable to the company's basic life assurance business, (ii)the sums paid to policy holders in the period in respect of claims referableto that business, and (iii) any amounts allocated to policy holders in respectof that period which do not fall within sub-paragraph (i) or sub-paragraph(ii) above and which are referable to that business, over (b) the aggregateof the premiums receivable by the company for the period in respect of itsbasic life assurance business and the opening liabilities to policy holdersreferable to that business, and, if there is no such excess, “B” is zero.(5) The references in subsection (4) above to the opening and closingliabilities to policy holders are references to those liabilities includingany such amount as is referred to in section 82(1)(b) above. (6) In relationto an accounting period, references in subsection (4) above to thecorresponding period of account are references,— (a) if the accountingperiod coincides with a period of account, to that period; and (b) in anyother case, to the period of account in which the accounting period iscomprised; and, for the purpose of determining “B” in a case whereparagraph (b) above applies, the aggregates referred to in paragraphs (a) and(b) of subsection (4) above shall each be proportionately reduced to reflectthe length of the accounting period as compared with the length of thecorresponding period of account. (7) Subject to subsection (8) below, if inthe case of any accounting period of a company both “A” and “B” inthe formulae in subsection (2) above are zero,— (a) the shareholders'fraction shall be taken to be the whole; and (b) the policy holders' fractionshall be taken to be nil. (8) In relation to an accounting period of aninsurance company carrying on mutual life assurance business,— (a) anyreference to the shareholders' fraction is a reference to nil; and (b) anyreference to the policy holders' fraction is a reference to the whole.”.Definition of shareholders' share (subsection (3))employedfor purposes of Income and Corporation Taxes Act 1988, s.438(6A)–pension business

F53Words in s. 89(1) substituted (29.4.1996 with effect for the financial year 1996 and subsequent financial years) by 1996 c. 8, s. 73(4), Sch. 6 para. 26(3)(a)(4)

F54Words in s. 89(1) inserted (29.4.1996 with effect for the financial year 1996 and subsequent financial years) by 1996 c. 8, s. 73(4), Sch. 6 para. 26(3)(b)(4)

F55Words in s. 89(1) substituted (29.4.1996 with effect for the financial year 1996 and subsequent financial years) by 1996 c. 8, s. 73(4), Sch. 6 para. 26(3)(c)(4)

F56S. 89(2)(a) repealed (31.7.1997 with effect in relation to distributions made on or after 2.7.1997) by 1997 c. 58, ss. 23, 52, Sch. 3 para. 14(2)(a)(4), Sch. 8 Pt. II(6), note

F57Words in s. 89(2)(b) repealed (31.7.1997 with effect in relation to distributions made on or after 2.7.1997) by 1997 c. 58, ss. 23, 52, Sch. 3 para. 14(2)(b)(i)(4), Sch. 8 Pt. II(6), note

F58Words in s. 89(2)(b) substituted (31.7.1997 with effect in relation to distributions made on or after 2.7.1997) by 1997 c. 58, s. 23, Sch. 3 para. 14(2)(b)(ii)(4)

F59S. 89(2)(c) and word

and

immediately preceding it repealed (31.7.1997 with effect in relation to distributions made on or after 6.4.1999) by 1997 c. 58, ss. 36, 52, Sch. 6 para. 19(2)(4), Sch. 8 Pt. II(11), note

F60Words in s. 89(2)(c) substituted (31.7.1997 with effect in relation to distributions made on or after 2.7.1997) by 1997 c. 58, s. 23, Sch. 3 para. 14(2)(c)(4)

F61S. 89(2A) repealed (31.7.1997 with effect in relation to distributions made on or after 2.7.1997) by 1997 c. 58, ss. 36, 52, Sch. 6 para. 19(3)(4), Sch. 8 Pt. II(11), note

F62Word in s. 89(5)(a) substituted (1.12.2001) by S.I. 2001/3629, art. 60(3)

F63Words in s. 89(6) substituted (1.12.2001) by S.I. 2001/3629, art. 58(2)

F64S. 89(7) substituted (1.12.2001) by S.I. 2001/3629, art. 58(3)

Modifications etc. (not altering text)

C14S. 89 amended (27.7.1993 with application as mentioned in s. 78(11) of the amending Act) by 1993 c. 34, s. 78(6)(11)

[F6589A Modification of sections 83 and 89 in relation to overseas life insurance companies.E+W+S+N.I.

Schedule 8A to this Act (which makes modifications of sections 83 and 89 in relation to overseas life insurance companies) shall have effect.]

Annotations: Help about Annotation
Close

Annotations are used to give authority for changes and other effects on the legislation you are viewing and to convey editorial information. They appear at the foot of the relevant provision or under the associated heading. Annotations are categorised by annotation type, such as F-notes for textual amendments and I-notes for commencement information (a full list can be found in the Editorial Practice Guide). Each annotation is identified by a sequential reference number. For F-notes, M-notes and X-notes, the number also appears in bold superscript at the relevant location in the text. All annotations contain links to the affecting legislation.

Amendments (Textual)

F65S. 89A inserted (27.7.1993) by 1993 c. 34, s. 101(1)

90 Life policies etc. held by companies.E+W+S+N.I.

Schedule 9 to this Act (which imposes tax on certain benefits relating tolife policies, life annuities and capital redemption policies held bycompanies, and makes related provision) shall have effect.

Back to top

Options/Help

Print Options

You have chosen to open The Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act as a PDF

The Whole Act you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open The Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open The Whole Act without Schedules as a PDF

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download.

Would you like to continue?

You have chosen to open the Whole Act

The Whole Act you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open the Whole Act without Schedules

The Whole Act without Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

You have chosen to open Schedules only

The Schedules you have selected contains over 200 provisions and might take some time to download. You may also experience some issues with your browser, such as an alert box that a script is taking a long time to run.

Would you like to continue?

Close

Legislation is available in different versions:

Latest Available (revised):The latest available updated version of the legislation incorporating changes made by subsequent legislation and applied by our editorial team. Changes we have not yet applied to the text, can be found in the ‘Changes to Legislation’ area.

Original (As Enacted or Made):The original version of the legislation as it stood when it was enacted or made. No changes have been applied to the text.

Close

See additional information alongside the content

Geographical Extent: Indicates the geographical area that this provision applies to. For further information see ‘Frequently Asked Questions’.

Show Timeline of Changes: See how this legislation has or could change over time. Turning this feature on will show extra navigation options to go to these specific points in time. Return to the latest available version by using the controls above in the What Version box.

Close

Opening Options

Different options to open legislation in order to view more content on screen at once

Close

More Resources

Access essential accompanying documents and information for this legislation item from this tab. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enactedversion that was used for the print copy
  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • correction slips
  • links to related legislation and further information resources
Close

More Resources

Use this menu to access essential accompanying documents and information for this legislation item. Dependent on the legislation item being viewed this may include:

  • the original print PDF of the as enacted version that was used for the print copy
  • correction slips

Click 'View More' or select 'More Resources' tab for additional information including:

  • lists of changes made by and/or affecting this legislation item
  • confers power and blanket amendment details
  • all formats of all associated documents
  • links to related legislation and further information resources