Capital Allowances Act 2001

Life assurance business U.K.

254 Introductory U.K.

(1) Sections 255 and 256 apply if a company which is carrying on any life assurance business is entitled or liable to any allowances or charges for a chargeable period in respect of plant or machinery consisting of a management asset.

(2) In this Chapter “management asset” has the same meaning as in Chapter 1 of Part 12 (life assurance business).

255 Apportionment of allowances and charges U.K.

[F1 (1) Except where subsection (3) applies, any allowance to which the company is entitled, and any charge to which it is liable, for a chargeable period in respect of a management asset must be apportioned between basic life assurance and general annuity business, gross roll-up business and PHI business in accordance with subsections (1A) and (1B).]

[F1 (1A) The allowance or charge is to be apportioned to a category of business using the formula—

where—

A is the amount of the allowance or charge,

B is the mean of the opening and closing liabilities of that category of business, and

C is the mean of the opening and closing liabilities of all the categories of business mentioned in subsection (1) which are carried on by the company.

(1B) If C is nil or below nil, the allowance or charge to be apportioned to a category of business is such as is just and reasonable.]

F2 (2) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(3) If—

(a) the company is charged to tax under [F3 section 436A of ICTA (gross roll-up business)], and

(b) the management asset in respect of which it is entitled to an allowance or liable to a charge for a chargeable period is [F4 held for the purposes of a permanent establishment outside the United Kingdom at or through which the company carries on gross roll-up business],

the allowance or charge must be allocated (without any apportionment) to that business.

Textual Amendments

F1 S. 255(1)-(1B) substituted for s. 255(1)(1A) (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 69(2) (with Sch. 7 Pt. 2)

F2 S. 255(2) repealed (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 69(3), Sch. 27 Pt. 2(7) (with Sch. 7 Pt. 2)

F3 Words in s. 255(3)(a) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 69(4)(a) (with Sch. 7 Pt. 2)

F4 Words in s. 255(3)(b) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 69(4)(b) (with Sch. 7 Pt. 2)

Modifications etc. (not altering text)

C8 S. 255 modified by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 2005 (S.I. 2005/2014), reg. 43A (as inserted (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2007/2134, regs. 1(1), 33)

C9 S. 255 modified (with effect in accordance with reg. 1(2)(3) of the amending S.I.) by The Insurance Companies (Tax Exempt Business) Regulations 2007 (S.I. 2007/2145), regs. 1(1), 15

C10 S. 255 modified (with effect in accordance with reg. 1 of the amending S.I.) by The Overseas Life Insurance Companies Regulations 2006 (S.I. 2006/3271), regs. 1, 36 (as amended (with effect in accordance with reg. 1(2) of the amending S.I.) by S.I. 2007/2146, regs. 1(1), 21)

256 Different giving effect rules for different categories of business U.K.

(1) Subsection (2) applies if a company—

(a) carries on basic life assurance and general annuity business, and

[F5 (b) is charged to tax under the I minus E basis in respect of its life assurance business.]

(2) If this subsection applies—

(a) any allowances (or parts of allowances) to which the company is entitled in respect of the basic life assurance and general annuity business are to be given effect by treating them as [F6 expenses payable which fall to brought into account at Step 3 in section 76(7)] of ICTA, and

(b) any charges (or parts of charges) to which the company is liable in respect of that business are to be given effect by treating the amount of the charges (or parts of charges) as income under Case VI of Schedule D for the chargeable period in question.

(3) Subsection (4) applies if, for a chargeable period, a company is charged to tax under [F7 section 436A of ICTA (gross roll-up business)].

(4) If this subsection applies, then, for the purpose of calculating the [F8 profits] under Case VI of Schedule D for the chargeable period in question—

(a) any allowances (or parts of allowances) to which the company is entitled in respect of [F9 gross roll-up business] are to be given effect by treating them as an expense of [F9 its gross roll-up business], and

(b) any charges (or parts of charges) to which the company is liable in respect of [F10 gross roll-up business] are to be given effect by treating them as receipts of [F10 its gross roll-up business].

Textual Amendments

F5 S. 256(1)(b) substituted (with effect in accordance with s. 39(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 8 para. 23 (with Sch. 8 Pt. 2)

F6 Words in s. 256(2)(a) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendments of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 55(2)

F7 Words in s. 256(3) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 70(2) (with Sch. 7 Pt. 2)

F8 Word in s. 256(4) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 70(3)(a) (with Sch. 7 Pt. 2)

F9 Words in s. 256(4)(a) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 70(3)(b) (with Sch. 7 Pt. 2)

F10 Words in s. 256(4)(b) substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 70(3)(c) (with Sch. 7 Pt. 2)

Modifications etc. (not altering text)

C11 S. 256 modified (1.1.2002) by S.I. 1997/473, reg. 53C (as inserted by S.I. 2001/3975, reg. 8)

C12 S. 256 modified (with effect in accordance with reg. 1(2) of the commencing S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 2005 (S.I. 2005/2014), regs. 1(1), 44

257 Supplementary U.K.

(1) Allowances and charges to which sections 255 and 256 apply are not to be given effect otherwise than in accordance with those sections.

(2) Subsection (1) does not prevent any allowance which is to be given effect under those sections from being taken into account in any calculation for the purposes of—

[F11 (a) section 85A(3) of the Finance Act 1989 (excess adjusted Case I profits), or

(b) section 89 of that Act (policy holders' share of profits).]

F12 (3) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F11 S. 257(2)(a)(b) substituted (with effect in accordance with s. 39(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 8 para. 24 (with Sch. 8 Pt. 2)

F12 S. 257(3) repealed (with effect in accordance with Sch. 10 para. 17(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 10 para. 14(8)(a), Sch. 27 Pt. 2(10)