Corporation Tax Act 2009

Chapter 4 U.K. Special provision for life assurance business

General U.K.

1159 Limitation on relief under Chapter 2 U.K.

(1) Chapter 2 does not apply to allow an insurance company—

(a) any deduction under section 1147, or

(b) any additional deduction under section 1149,

in calculating in accordance with the provisions mentioned in subsection (2) the profits for an accounting period which arise to the company from its life assurance business or from its gross roll-up business.

(2) The provisions referred to in subsection (1) are those applicable for the purposes of section 35 (charge on trade profits).

I minus E basis U.K.

1160 Provision in respect of I minus E basis U.K.

The remaining provisions of this Chapter apply if, for an accounting period, an insurance company is charged to tax under the I minus E basis in respect of its life assurance business.

Relief F1 ... U.K.

Textual Amendments

F1 Words in Pt. 14 Ch. 4 cross-heading omitted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 7 para. 12(8)

1161 Relief in respect of I minus E basis: F2 ... expenses payable U.K.

(1) A company is entitled to relief for an accounting period if conditions A, B and C are met.

(2) Condition A is that [F3 a major interest in] land in the United Kingdom is a management asset of the company.

[F4 (3) Condition B is that—

(a) in the case of land in a contaminated state, the land was in a contaminated state at the time of the acquisition by the company of a major interest in the land, and

(b) in the case of land in a derelict state, the land was in a derelict state throughout the period beginning with the earlier of—

(i) 1 April 1998, and

(ii) the date on which a major interest in the land was first acquired by the company or a person who was connected with the company.

(3A) The Treasury may by order—

(a) specify circumstances in which the condition in paragraph (a) of subsection (3) need not be met, or

(b) replace the date for the time being specified in paragraph (b)(i) of that subsection with a later date.

(3B) An order under subsection (3A) may contain incidental, supplemental, consequential and transitional provision and savings.]

(4) Condition C is that the company incurs qualifying [F5 land remediation] expenditure in the accounting period in respect of the land F6 ....

F7 (5) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6) The relief is that the company may treat F8 ... the qualifying Chapter 4 expenditure as expenses payable which fall to be brought into account for the accounting period at Step 1 in section 76(7) of ICTA (deduction for expenses payable).

(7) For the purposes of this section land is a management asset of a company if it is—

(a) an asset provided for use or used for the management of life assurance business carried on by the company, or

(b) an asset in respect of which expenditure is being incurred with a view to such use by the company.

Textual Amendments

F2 Word in s. 1161 heading omitted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 7 para. 12(7)

F3 Words in s. 1161(2) inserted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 12(2)

F4 S. 1161(3)-(3B) substituted for s. 1161(3) (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 12(3)

F5 Words in s. 1161(4) substituted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 12(4)(a)

F6 Words in s. 1161(4) omitted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 7 para. 12(4)(b)

F7 S. 1161(5) omitted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 7 para. 12(5)

F8 Words in s. 1161(6) omitted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by virtue of Finance Act 2009 (c. 10), Sch. 7 para. 12(6)

[F9 1162 Additional relief U.K.

(1) If a company is entitled to relief under section 1161 for an accounting period it is also entitled to relief under this section for the period.

(2) For the company to obtain the relief it must make a claim.

(3) The relief is that the company may treat 50% of the qualifying Chapter 4 expenditure as expenses payable which fall to be brought into account at Step 3 in section 76(7) of ICTA (deduction for expenses payable).

(4) For the purposes of this Chapter “the qualifying Chapter 4 expenditure” means—

(a) the company's qualifying land remediation expenditure for the accounting period, less

(b) the amount (if any) which as a result of paragraph (a) of Step 1 in section 76(7) of ICTA is not to be brought into account at that step as expenses payable for the period.]

Textual Amendments

F9 S. 1162 substituted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 13

1163 No relief if company responsible for contamination [F10 or dereliction or polluter has interest] U.K.

[F11 (1)] A company is not entitled to relief under section 1161 [F12 or 1162] in respect of expenditure on land all or part of which is in a contaminated [F13 or derelict state if the land is in a contaminated or derelict] state wholly or partly as a result of any thing done, or omitted to be done, at any time by—

(a) the company, or

(b) a person with a relevant connection to the company (see section 1178).

[F14 (2) A company is not entitled to relief under this Chapter in respect of expenditure on land all or part of which is in a contaminated or derelict state if—

(a) the land is in that state wholly or partly as a result of any thing done, or omitted to be done, by a person not within subsection (1), and

(b) that person, or a person connected with that person, has a relevant interest in the land.

(3) For the purposes of subsection (2) a person has a relevant interest in land if—

(a) the person holds any interest in, right over or licence to occupy the land (including an option to acquire any such interest, right or licence in any circumstances), or

(b) has disposed of any estate or interest in the land for a consideration that to any extent reflects the impact, or likely impact, on the value of the land of the remediation of its contamination or dereliction.]

Textual Amendments

F10 Words in s. 1163 heading inserted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 14(5)

F11 S. 1163(1): s. 1163 renumbered as s. 1163(1) (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 14(2)

F12 Words in s. 1163(1) inserted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 14(3)(a)

F13 Words in s. 1163(1) substituted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 14(3)(b)

F14 S. 1163(2)(3) inserted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 14(4)

Life assurance company tax credits U.K.

1164 Entitlement to tax credit U.K.

(1) A company is entitled to a life assurance company tax credit for an accounting period if it has a qualifying life assurance business loss in the period (see section 1165).

(2) For the company to obtain a life assurance company tax credit in respect of all or part of the qualifying life assurance business loss it must make a claim.

(3) The amount of a life assurance company tax credit to which the company is entitled is determined in accordance with section 1166.

(4) See also section 1168, which restricts the carry forward of expenses payable where a company claims a life assurance company tax credit.

1165 Meaning of “qualifying life assurance business loss” U.K.

(1) For the purposes of this Chapter a company has a “qualifying life assurance business loss” in an accounting period (“the relevant accounting period”) if in the period—

(a) it is entitled to relief under section 1161 [F15 or 1162], and

(b) an amount falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA (unrelieved expenses carried forward).

(2) In determining for the purposes of subsection (1)(b) whether there is an amount which falls to be carried forward to a subsequent accounting period under section 76(12) of ICTA, no account is to be taken of the amounts specified in subsection (3).

(3) Those amounts are amounts—

(a) brought forward from an earlier accounting period, and

(b) treated for the purposes of section 76 of ICTA as expenses payable which fall to be brought into account for the relevant accounting period in accordance with—

(i) Step 7 in section 76(7) of ICTA, as a result of a previous application of section 76(12) or (13) of that Act, or

(ii) Step 3 in section 76(7) of ICTA, as a result of section 391 of this Act (carry forward of surplus deficit).

(4) The amount of the qualifying life assurance business loss is—

(a) the amount which falls to be carried forward as mentioned in subsection (1)(b), or

(b) if less, 150% of the qualifying Chapter 4 expenditure in respect of which the relief was obtained.

Textual Amendments

F15 Words in s. 1165(1)(a) inserted (with effect in accordance with Sch. 7 paras. 27, 28 of the amending Act) by Finance Act 2009 (c. 10), Sch. 7 para. 15

1166 Amount of tax credit U.K.

(1) The amount of the life assurance company tax credit to which a company is entitled for an accounting period is 16% of the amount of the qualifying life assurance business loss for the period.

(2) The Treasury may by order replace the percentage for the time being specified in subsection (1) with a different percentage.

(3) An order under subsection (2) may contain incidental, supplemental, consequential and transitional provision and savings.

1167 Payment of tax credit etc U.K.

(1) The provisions mentioned in subsection (2) have effect in relation to a life assurance company tax credit subject to the modifications set out in subsection (3).

(2) The provisions referred to in subsection (1) are—

• section 1151(4) (payment of tax credit by officer of Revenue and Customs);

• section 1155 (supplementary provision about payment of tax credit);

• section 1156 (tax credit payment not income of company);

• section 1157 (qualifying expenditure excluded for capital gains purposes).

(3) The modifications referred to in subsection (1) are as follows—

(a) for any reference to a land remediation tax credit substitute a reference to a life assurance company tax credit, and

(b) in section 1157(2) for the reference to qualifying land remediation expenditure substitute a reference to qualifying Chapter 4 expenditure.

1168 Restriction on carrying forward expenses payable where tax credit claimed U.K.

(1) This section applies if a company claims a life assurance company tax credit to which it is entitled for an accounting period.

(2) For the purposes of section 76 of ICTA the amount which may be—

(a) carried forward from the accounting period under subsection (12) of that section, and

(b) brought into account in accordance with Step 7 in subsection (7) of that section,

is treated as reduced by the amount of the surrendered loss for the period.

(3) The “amount of the surrendered loss” for the period means the amount of the qualifying life assurance business loss in respect of which the land remediation tax credit is claimed for the period.