Finance Act 2007

Capital Allowances Act 2001 (c. 2)

69 (1) Section 255 (apportionment of allowances and charges) is amended as follows.

(2) For subsections (1) and (1A) substitute—

“(1) Except where subsection (3) applies, any allowance to which the company is entitled, and any charge to which it is liable, for a chargeable period in respect of a management asset must be apportioned between basic life assurance and general annuity business, gross roll-up business and PHI business in accordance with subsections (1A) and (1B).

(1A) The allowance or charge is to be apportioned to a category of business using the formula—

where—

• A is the amount of the allowance or charge,

• B is the mean of the opening and closing liabilities of that category of business, and

• C is the mean of the opening and closing liabilities of all the categories of business mentioned in subsection (1) which are carried on by the company.

(1B) If C is nil or below nil, the allowance or charge to be apportioned to a category of business is such as is just and reasonable.”

(3) Omit subsection (2).

(4) In subsection (3)—

(a) in paragraph (a), for “section 441 of ICTA in respect of its overseas life assurance business” substitute “section 436A of ICTA (gross roll-up business)”, and

(b) in paragraph (b), for “provided outside the United Kingdom for use for the management of that business” substitute “held for the purposes of a permanent establishment outside the United Kingdom at or through which the company carries on gross roll-up business”.