Life assurance business
254Introductory
(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).
255Apportionment of allowances and charges
(1)Except where subsection (3) applies, the allowances or charges must be apportioned between the different categories of life assurance business carried on by the company, using the formula—
where—
A is the amount of the allowance or charge,
B is the mean of the opening and closing liabilities of the category of life assurance concerned, and
C is the mean of the opening and closing liabilities of all the categories of life assurance business carried on by the company.
(2)In its application to an overseas life insurance company, subsection (1) has effect as if the references to liabilities were only to such liabilities as are attributable to the branch or agency in the United Kingdom through which the company carries on the business concerned.
(3)If—
(a)the company is charged to tax under section 441 of ICTA in respect of its overseas life assurance 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 provided outside the United Kingdom for use for the management of that business,
the allowance or charge must be allocated (without any apportionment) to that business.
256Different giving effect rules for different categories of business
(1)Subsection (2) applies if a company—
(a)carries on basic life assurance and general annuity business, and
(b)does not fall to be charged to tax in accordance with the provisions applicable to Case I of Schedule D in respect of the profits of that 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 additional expenses of management within section 76 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—
(a)section 436 of ICTA (pension business and ISA business),
(b)section 439B of ICTA (life reinsurance business), or
(c)section 441 of ICTA (overseas life assurance business).
(4)If this subsection applies, then, for the purpose of calculating the profit 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 any particular category of business are to be given effect by treating them as an expense of that category of business, and
(b)any charges (or parts of charges) to which the company is liable in respect of any particular category of business are to be given effect by treating them as receipts of that category of business.
257Supplementary
(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—
(a)section 89 of FA 1989 (calculation of “policy holders' share of profits”), or
(b)section 76(2) of ICTA (calculation for purposes of complying with restriction on amount of deductible management expenses).
(3)Expressions that are used—
(a)in sections 255 and 256, and
(b)in Chapter I of Part XII of ICTA (insurance companies and capital redemption business),
have the same meaning in those sections as in that Chapter.