PART 2

Insurance companies carrying on long-term business
CHAPTER 5

I - E profit: policyholders’ rate of tax

Tax rate on policyholders’ share of I - E profit

Meaning of “BLAGAB non-taxable distributions” and “shareholders’ share”
105
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—
BTP/(BNTD + 1)
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.