Corporation Tax Act 2009

Chapter 4 Special provision for life assurance business

General

1159 Limitation on relief under Chapter 2

(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

1160 Provision in respect of I minus E basis

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 for qualifying Chapter 4 expenditure

1161 Relief in respect of I minus E basis: enhanced expenses payable

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

(2) Condition A is that land in the United Kingdom is a management asset of the company.

(3) Condition B is that at the time of acquisition of the land by the company all or part of the land is or was in a contaminated state (see section 1145).

(4) Condition C is that the company incurs qualifying Chapter 4 expenditure in the accounting period in respect of the land (see section 1162).

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

(6) The relief is that the company may treat 150% of 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.

1162 Meaning of “qualifying Chapter 4 expenditure”

For the purposes of this Chapter a company’s “qualifying Chapter 4 expenditure” in an accounting period means—

(a) its qualifying land remediation expenditure in the 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.

1163 No relief if company responsible for contamination

A company is not entitled to relief under section 1161 in respect of expenditure on land all or part of which is in a contaminated state if the land is in that 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).

Life assurance company tax credits

1164 Entitlement to tax credit

(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”

(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, 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.

1166 Amount of tax credit

(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

(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

(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.