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Finance Act 2012

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Taxation of Chargeable Gains Act 1992E+W+S+N.I.

72TCGA 1992 is amended as follows.

73In section 10B (non-resident company with United Kingdom permanent establishment), after subsection (3) insert—

(3A)This section applies to an overseas life insurance company in the case of its long-term business with the omission from subsection (1)(b) of the words “situated in the United Kingdom and”.

74In section 100(2B)(a) (exemption for authorised unit trusts etc), for “section 431 of the Taxes Act” substitute “ section 65 of the Finance Act 2012 ”.

75In section 140C (transfer or division of non-UK business), omit subsection (8).

76In section 151I(1) (meaning of “financial institution”)—

(a)in paragraph (g), for “section 431(2) of ICTA” substitute “ section 65 of the Finance Act 2012 ”, and

(b)in paragraph (h), for “section 431(2) of ICTA” substitute “ section 139(1) of the Finance Act 2012 ”.

77(1)Section 171C (elections under s.171A: insurance companies) is amended as follows.E+W+S+N.I.

(2)In subsection (2), for “section 440(3) of the Taxes Act” substitute “ section 118 of the Finance Act 2012 ”.

(3)In subsection (3)(b), for “part of that company's long-term insurance fund” substitute “ held for the purposes of the company's long-term business ”.

(4)In subsection (4), for the words from “as arising” to the end substitute “ for the purposes of section 210A (ring-fencing of losses) as a non-BLAGAB chargeable gain or (as the case may be) a non-BLAGAB allowable loss ”.

(5)Omit subsection (5).

78In section 185 (deemed disposal of assets on company ceasing to be UK resident), after subsection (4) insert—

(4A)Subsection (4) applies to an overseas life insurance company in the case of its long-term business with—

(a)the omission from paragraph (a) of the words “are situated in the United Kingdom and”; and

(b)the omission from paragraph (b) of the words “are so situated and”.

79In section 204(10)(a) (policies of insurance and non-deferred annuities), for “Chapter 1 of Part 12 of the Taxes Act” substitute “ section 56(3) of the Finance Act 2012 ”.

80(1)Section 210A (ring-fencing of losses) is amended as follows.E+W+S+N.I.

(2)For subsection (2) substitute—

(2)Non-BLAGAB allowable losses accruing to an insurance company are allowable as a deduction from the shareholders' share (if any) of the BLAGAB chargeable gains accruing to the company (but are not otherwise allowable as a deduction from the BLAGAB chargeable gains accruing to the company).

(3)For subsections (10) and (10A) substitute—

(10)For the purposes of this section the “shareholders' share” of BLAGAB chargeable gains or BLAGAB allowable losses accruing to an insurance company in an accounting period is determined as follows.

(10A)If the company has an I - E profit for the accounting period—

(a)find the percentage (including, if applicable, nil) of the I - E profit that is not represented by the policyholders' share of that profit as determined in accordance with section 103 of the Finance Act 2012, and

(b)then multiply that percentage by the amount of the BLAGAB chargeable gains or BLAGAB allowable losses.

The result is the shareholder's share of the BLAGAB chargeable gains or BLAGAB allowable losses.

(10B)If the company does not have an I - E profit for the accounting period, the shareholders' share of the BLAGAB chargeable gains or BLAGAB allowable losses is nil.

(10C)In determining for the purposes of subsections (10A) and (10B) whether or not the company has an I - E profit for an accounting period, assume that non-BLAGAB allowable losses cannot be deducted to any extent from BLAGAB chargeable gains (and, accordingly, assume that section 95 is not included in the Finance Act 2012).

(4)In subsection (11)—

(a)for “the policy holders' share” substitute “the shareholders' share”, and

(b)for “subsection (10)” substitute “ subsections (10) to (10C) ”.

(5)Omit subsection (12).

(6)In subsection (13)—

(a)in the definitions of “BLAGAB allowable losses” and “BLAGAB chargeable gains”, for “(in accordance with section 432A of the Taxes Act)” substitute “ , in accordance with Chapter 4 of Part 2 of the Finance Act 2012, ”, and

(b)omit the definitions of “the relevant profits” and “the policy holders' share of the relevant profits” (together with the “and” before the definition of “the relevant profits”).

81(1)Section 210B (disposal and acquisition of section 440A securities) is amended as follows.E+W+S+N.I.

(2)In subsection (1)—

(a)in the opening words, for “section 440A securities” (in both places) substitute “ section 119 or 120 securities ”, and

(b)in paragraphs (a) and (b), for “chargeable section 440A holding” substitute “ chargeable section 119 or 120 holding ”.

(3)In subsection (7)(a), for “linked assets” substitute “ assets wholly matched to BLAGAB liabilities and the assets are ”.

(4)For subsection (8) substitute—

(8)In this section—

  • BLAGAB internal linked fund” means an internal linked fund all the assets appropriated to which are matched wholly to BLAGAB liabilities,

  • chargeable section 119 or 120 holding” means a holding which is a separate holding as a result of section 119(1)(a), (c) or (d) or section 120(1)(a), (c) or (d) of the Finance Act 2012 (and section 121(1) and (2) of that Act),

  • internal linked fund”, in relation to an insurance company, means an account—

    (a)

    to which assets matched to the company's life assurance liabilities are appropriated by the company, and

    (b)

    which may be divided into units the value of which is determined by the company by reference to the value of those assets, and

  • section 119 or 120 securities” means securities within the meaning of section 119 or 120 of the Finance Act 2012 (see section 121(6)).

(5)In the heading, for “section 440A securities” substitute section 119 or 120 securities.

82In section 210C(2) (losses on disposal of authorised investment fund assets to connected manager), in the definition of “authorised investment fund assets”, for “of the company's long-term insurance fund consisting of” substitute “ held by the company for the purposes of its long-term business that consist of ”.

83(1)Section 211 (transfers of business) is amended as follows.E+W+S+N.I.

(2)In subsection (2)—

(a)in paragraph (a), for “of the transferor's long-term insurance fund” substitute “ held by the transferor for the purposes of its long-term business ”, and

(b)in paragraph (b), for “of the transferee's long-term insurance fund” substitute “ held by the transferee for the purposes of its long-term business ”.

(3)In subsection (2A), for “structural assets within the meaning of section 83XA of the Finance Act 1989” substitute “ assets which formed part of the long-term business fixed capital of the company in question ”.

(4)After subsection (3) insert—

(4)Subsection (2) does not apply in relation to assets which are referable to the long-term business of the transferor if all the income of the transferor's long-term business is chargeable to corporation tax on income under section 35 of CTA 2009.

84In section 211ZA(10) (transfers of business: transfer of unused losses), for “(in accordance with section 432A of the Taxes Act)” substitute “ , in accordance with Chapter 4 of Part 2 of the Finance Act 2012, ”.

85(1)Section 212 (annual deemed disposal of holdings of unit trusts etc) is amended as follows.E+W+S+N.I.

(2)In subsection (1), for “of an insurance company's long-term insurance fund” substitute “ held by an insurance company for the purposes of its long-term business ”.

(3)Omit subsection (2).

(4)At the end insert—

(9)This section applies to an overseas life insurance company as if references in subsection (1) to assets were to such of the assets concerned as are UK assets.

(10)Assets (whether situated in the United Kingdom or elsewhere) are “UK assets” if, in accordance with the provision made by or under Chapter 4 of Part 2 of CTA 2009, they fall to be attributed to the permanent establishment in the United Kingdom through which the company carries on life assurance business.

86(1)Section 213 (spreading of gains and losses under section 212) is amended as follows.E+W+S+N.I.

(2)In subsection (1A), for “(in accordance with section 432A of the Taxes Act)” substitute “ , in accordance with Chapter 4 of Part 2 of the Finance Act 2012, ”.

(3)After subsection (4) insert—

(4ZA)Subsection (4) applies in relation to an overseas life insurance company with the insertion after “long-term business” of the words “in the United Kingdom through a permanent establishment”.

87After section 213 insert—

213APower to modify ss.212 and 213 etc in case of CFCs that are offshore funds

(1)The Treasury may make regulations for the purpose mentioned in subsection (2) in any case where—

(a)an insurance company to which the I - E rules apply is deemed to make a disposal under section 212 of an interest in an offshore fund,

(b)the offshore fund is a CFC, and

(c)there is (or, but for the regulations, would be) a CFC charge on the insurance company referable to its relevant interest in the CFC for the accounting period in which the disposal is deemed to have been made.

(2)The regulations are to be made for the purpose of modifying the operation of—

(a)section 212 or 213,

(b)the CFC rules, or

(c)the I - E rules,

in relation to any accounting period of the insurance company so as to reduce the charge to tax.

(3)The regulations may—

(a)make different provision for different cases or circumstances, and

(b)contain incidental, supplementary, consequential, transitional, transitory or saving provision.

(4)The provision that may be made as a result of subsection (3)(b) includes provision modifying any other provision of the Corporation Tax Acts.

(5)In this section—

  • CFC” and “CFC charge” have the same meanings as in Part 9A of TIOPA 2010 (see section 371VA),

  • the CFC rules” means the rules contained in that Part, and

  • offshore fund” has the meaning given by section 355 of TIOPA 2010.

88(1)Schedule 7AC (exemptions for disposals by companies with substantial shareholdings) is amended as follows.E+W+S+N.I.

(2)In paragraph 6(1)(c), for “section 440(1) or (2) of the Taxes Act” substitute “ any of sections 116 to 118 of the Finance Act 2012 ”.

(3)Paragraph 17 is amended as follows.

(4)In sub-paragraph (2), for “of its long-term insurance fund” substitute “ held by it for the purposes of its long-term business ”.

(5)In sub-paragraph (3)(b), for “of its long-term insurance fund” substitute “ for the purposes of its long-term business ”.

(6)In sub-paragraph (4), for “as assets of its long-term insurance fund” substitute “ for the purposes of its long-term business ”.

(7)In sub-paragraph (4A)—

(a)for “of the investing company's long-term insurance fund” substitute “ held by the investing company for the purposes of its long-term business ”,

(b)for “as assets of its long-term insurance fund” substitute “ for the purposes of its long-term business ”, and

(c)for “a structural asset, or structural assets, within the meaning of section 83XA of the Finance Act 1989” substitute “ an asset or assets which formed part of the long-term business fixed capital of the company in question ”.

(8)In the italic heading before that paragraph, for “insurance company's long-term insurance fund” substitute insurance company held for the purposes of its long-term business.

89In paragraph 1 of Schedule 7AD (gains of insurance company from venture capital investment partnership), for “the assets of the long-term insurance fund of an insurance company (“the company”)” substitute “ the assets held by an insurance company (“the company”) for the purposes of its long-term business ”.

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