Finance Act 2008

Increased non-trading credits

4 (1) Where the relevant company brings into account credits and debits in respect of the investment life insurance contract on the basis of fair value accounting, the relevant amount under paragraph 3 is determined as if for “NTC” in the formula in sub-paragraph (3) of that paragraph there were substituted “PC”.

(2) For this purpose “PC” is the profit from the contract, that is any amount by which—

(a) the amount payable as a result of the related transaction, exceeds

(b) the fair value of the contract when the contract was made or, if the contract was made before the beginning of the first accounting period of the company beginning on or after 1 April 2008, at the beginning of that period.

(3) If the related transaction is an assignment (or, in Scotland, assignation) or surrender of only part of the rights conferred by the contract, sub-paragraph (2) has effect as if paragraph (b) of that sub-paragraph referred to the relevant fraction of the fair value of the contract when the contract was made or, if the contract was made before the beginning of the first accounting period of the company beginning on or after 1 April 2008, at the beginning of that period.

(4) For this purpose the relevant fraction is—

where—

• C is the amount payable as a result of the related transaction, and

• FVC is the fair value of the contract immediately before the related transaction.