The Individual Savings Account (Insurance Companies) Regulations 1998
Citation and commencement
1.
These Regulations may be cited as the Individual Savings Account (Insurance Companies) Regulations 1998 and shall come into force on 6th April 1999.
Interpretation
2.
In these Regulations—
“individual savings account business” has the meaning given by regulation 3;
- “the principal Regulations” means the Individual Savings Account Regulations 19982;
“the Taxes Act” means the Income and Corporation Taxes Act 1988.
Individual savings account business
3.
For the purposes of these Regulations “individual savings account business” in relation to an insurance company means so much of that company’s life assurance business as is referable to any policy of life insurance, or to the reinsurance of liabilities under any such policy, where the policy is, on the date on which the insurance is made, a qualifying investment for an insurance component within the meaning of regulation 9 of the principal Regulations.
Tax credits on distributions to insurance companies
4.
(1)
(2)
Schedule 4 to the Finance (No. 2) Act 1997 shall have effect in relation to a distribution to which paragraph (1) applies with the following modifications—
(a)
paragraph 2 shall be omitted;
(b)
in paragraph 3(2) for “1999” there shall be substituted “2004”.
Modifications of the Taxes Act
5.
Regulations 6 to 21 specify modifications of provisions of the Taxes Act so far as concerns individual savings account business of insurance companies.
6.
7.
““individual savings account business” has the meaning given by regulation 3 of the Individual Savings Account (Insurance Companies) Regulations 1998;”.
8.
9.
In section 431F after the words “pension business,” there shall be inserted “individual savings account business,”.
10.
“(aa)
individual savings account business;”.
11.
“(aa)
individual savings account business;”.
12.
13.
(a)
after the words “pension business”, in each place where they occur, there shall be inserted “or individual savings account business”;
(b)
in subsection (1)(a) for the words “that business” there shall be substituted “the business of each such class”.
14.
15.
16.
17.
““individual savings account business” shall be construed in accordance with section 431;”.
18.
“(aa)
individual savings account business,”.
19.
20.
(1)
(2)
Paragraph 3 of Schedule 19AB shall apply in relation to pension business and individual savings account business taken together, so that references to repayments are references to the aggregate of amounts relating to pension business and individual savings account business, with the modifications specified in regulation 21 and the following additional modifications—
(a)
in sub-paragraph (1A)—
(i)
after the words “pension business”, where they first occur, there shall be inserted “and individual savings account business”;
(ii)
in paragraph (a) after the words “pension business” there shall be added “and individual savings account business”;
(iii)
in paragraph (b) for the words “pension business” there shall be substituted “individual savings account business”;
(b)
in sub-paragraph (1C) after the words “pension business”, in both places where they occur, there shall be inserted “and individual savings account business”.
21.
(1)
The amendments made to Schedule 19AB by paragraphs 10 to 12 of Schedule 3 to the Finance (No. 2) Act 1997, other than the amendment made by paragraph 10(4) of that Schedule, shall not have effect.
(2)
Paragraph 1(2) of Schedule 19AB (provisional repayment period) shall have effect, in relation to an insurance company carrying on pension business that begins to carry on individual savings account business, as if a provisional repayment period began, as respects the company’s individual savings account business, when the company began to carry on individual savings account business (“the commencement date”) and ended when the provisional repayment period for the company’s pension business in which the commencement date falls ended.
(3)
In paragraph 1(3) of Schedule 19AB there shall be added at the end “or to the fraction determined in accordance with sub-paragraphs (4A) to (4C) below”.
(4)
“(4A)
Where in any relevant accounting period a company carries on individual savings account business, the provisional fraction for the purposes of this paragraph for that accounting period shall be such fraction as the company may reasonably estimate, being a fraction which an inspector is satisfied is not likely to be greater than the relevant fraction determined in accordance with subsections (5) to (9) of section 432A for that accounting period or (as the case may be) for such part of that accounting period as ends at the end of the most recent provisional repayment period of that company.
(4B)
Where an inspector is not satisfied as mentioned in sub-paragraph (4A) above, he shall refer any question as to the amount of the estimate of the provisional fraction to the Special Commissioners, who shall hear and determine that question in the same way as an appeal to the Special Commissioners under the Taxes Acts.
(4C)
In sub-paragraph (4A) above “relevant accounting period” means—
(a)
the accounting period in which the date of 6th April 1999 falls, or
(b)
either of the next two accounting periods.”
Modifications of the Taxation of Chargeable Gains Act 1992
22.
23.
Amendments to the Manufactured Payments and Transfer of Securities (Tax Relief) Regulations 1995
24.
(1)
(2)
In regulations 3(2) and 4(2) after the words “pension business”, in both places where they occur, there shall be inserted the words “or individual savings account business within the meaning of regulation 3 of the Individual Savings Account (Insurance Companies) Regulations 1998”.
Amendments to the Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997
25.
(1)
(2)
““individual savings account business” has the meaning given by regulation 3 of the Individual Savings Account (Insurance Companies) Regulations 1998;”.
(3)
“19A.
(1)
Paragraph (2) prescribes a modification of section 436 of the Taxes Act so far as it applies to the life or endowment business carried on by non-directive societies other than societies—
(a)
which carry on any individual savings account business which is linked business, and
(b)
to which section 432E of the Taxes Act does not apply.
(2)
After subsection (3)(e) there shall be inserted the following paragraph—“and
(f)
the opening liabilities and the closing liabilities of the society shall be ascertained in accordance with paragraph (b) of the definition of “liabilities” in subsection (2) of section 431, and the definition of “closing liabilities” in that subsection shall not apply.”
(4)
“20A.
(1)
Paragraph (2) prescribes a modification of section 436 of the Taxes Act so far as it applies to the life or endowment business carried on by non-directive societies—
(a)
which carry on any individual savings account business which is linked business, and
(b)
to which section 432E of the Taxes Act does not apply.
(2)
After subsection (5) the following subsections shall be inserted—“(6)
Subsection (7) below applies where the amount shown in respect of Item 3 of Part I of Schedule 7 to the Friendly Societies (Accounts and Related Provisions) Regulations 1994 (“the Item 3 amount”) is a positive amount; and subsection (8) below applies where the Item 3 amount is a negative amount.
(7)
The amount of the increase in liabilities to policy holders (that is to say, the excess of the society’s closing liabilities to policy holders over its opening liabilities to policy holders) that is taken into account for the purpose of computing the profits arising to the society from individual savings account business shall be the Item 3 amount.
(8)
The amount of the decrease in liabilities to policy holders (that is to say, the excess of the society’s opening liabilities to policy holders over its closing liabilities to policy holders) that is taken into account for the purpose of computing the profits arising to the society from individual savings account business shall be the Item 3 amount.”
(5)
“Modification of section 460(2) of the Taxes Act31.
(1)
Paragraph (2) prescribes a modification of section 460(2) of the Taxes Act.
(2)
After paragraph (b) there shall be inserted the following paragraph—“(ba)
shall not apply to profits arising from individual savings account business;”.
These Regulations, which come into force on 6th April 1999, make provision in relation to the individual savings account business of insurance companies (“ISA business”).
Regulation 1 provides for citation and commencement, and regulation 2 for interpretation.
Regulation 3 defines ISA business for the purposes of the Regulations.
Regulation 4 provides that the abolition of tax credits payable in respect of distributions made to companies resident in the United Kingdom on and after 6th April 1999 shall not have effect as respects distributions made to insurance companies before 6th April 2004 in respect of investments relating to ISA business of those companies.
Regulations 5 to 21 modify various provisions of the Income and Corporation Taxes Act 1988 so as to include references to ISA business.
Regulations 22 and 23 modify sections 212(2) and 214A(11)(a) of the Taxation of Chargeable Gains Act 1992 so as to include a reference to individual savings account business in each of those sections.