Finance Act 2012 (c. 14)

PART 2 U.K. Insurance companies carrying on long-term business

CHAPTER 5 U.K. I - E profit: policyholders' rate of tax

Tax rate on policyholders' share of I - E profit U.K.

105 Meaning of “BLAGAB non-taxable distributions” and “shareholders' share” U.K.

(1) This section explains for the purposes of section 104 what is meant by—

• “BLAGAB non-taxable distributions”, and

• “the shareholders' share” of BLAGAB non-taxable distributions.

(2) Non-taxable distributions are “BLAGAB” non-taxable distributions if they are referable, in accordance with Chapter 7, to the company's basic life assurance and general annuity business.

(3) The “shareholders' share” of the BLAGAB non-taxable distributions receivable by the company in the accounting period is the relevant proportion of those distributions.

(4) The relevant proportion is—

where—

BTP is the amount of the BLAGAB trade profit of the company for the accounting period,

BNTD is the amount of the BLAGAB non-taxable distributions receivable by the company in the accounting period, and

I is the total of the amounts given by the calculations required by steps 1 to 3 in section 73 (I - E basis: income referable to BLAGAB) in relation to the company's basic life assurance and general annuity business for the accounting period.

(5) If BTP exceeds BNTD + I, the shareholders' share of the BLAGAB non-taxable distributions receivable by the company in the accounting period is the whole of those distributions.