Finance Act 2008

Commencement

6 (1) Where the relevant company was a party to an investment life insurance contract immediately before the beginning of the first accounting period of the company beginning on or after that date, the company is to be treated for the purposes of Chapter 2 of Part 13 of ICTA (life policies etc) as having surrendered all the rights under the contract immediately before that date for an amount equal to the carrying value of the contract at that time as recognised for accounting purposes.

(2) Any gain arising under Chapter 2 of Part 13 of ICTA by reason of that deemed surrender (“the Chapter 2 gain”)—

(a) is not income of the company for the accounting period in which it arises, but

(b) is instead to be brought into account as a non-trading credit for the accounting period in which there is a related transaction.

(3) If, immediately after the related transaction, the company is still a party to the investment life insurance contract, only the relevant fraction of the Chapter 2 gain is brought into account as mentioned in sub-paragraph (2)(b).

(4) “The relevant fraction” is—

where—

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

• SAR is the amount that would have been payable on a surrender of all of the rights under the contract immediately before the related transaction.