Income and Corporation Taxes Act 1988

438 Pension business: exemption from tax. U.K.

(1) M1 Exemption from corporation tax shall be allowed in respect of income from, and chargeable gains in respect of, investments and deposits of so much of an insurance company’s life assurance fund and separate annuity fund, if any, as is referable to pension business.

(2) M2 The exemption from tax conferred by subsection (1) above shall not exclude any sums from being taken into account as receipts in computing profits or losses for any purpose of the Corporation Tax Acts.

(3) M3 Subject to subsection (6) below, the exclusion by section 208 from the charge to corporation tax of franked investment income shall not prevent such income being taken into account as part of the profits in computing under section 436 income from pension business.

(4) M4 If in the case of any company the income referred to in subsection (1) above includes a distribution in respect of which the company is entitled to a tax credit, the company may, subject to subsections (5) and (6) below, claim to have the amount of that credit paid to it.

(5) If the company is resident in the United Kingdom (so that the distribution and the tax credit in question constitute franked investment income of that company), no franked investment income comprising any tax credit which is paid under subsection (4) above shall, subject to subsection (6) below, be used under Chapter V of Part VI to frank the company’s distributions.

(6) M5 If for any accounting period there is, apart from this subsection, a profit arising to an insurance company from pension business and computed under section 436, and the company so elects as respects all or any part of its [F1 relevant] franked investment income arising in that period, being an amount of franked investment income not exceeding the amount of that profit, subsections (3) to (5) above shall not apply to the franked investment income to which the election relates.

[F2 (6A) In subsection (6) above “relevant franked investment income” means the shareholders’ share of franked investment income within subsection (1) above, and for this purpose “shareholders’ share” has the same meaning as for the purposes of section 89 of the Finance Act 1989.]

(7) An election under subsection (6) above shall be made by notice given to the inspector not later than two years after the end of the accounting period to which the election relates or within such longer period as the Board may by notice allow.

(8) M6 Nothing in sections 431(4)(c) or 643(2) of this Act or section [F3 271(1)(h) of the 1992 Act] shall be construed as affording relief in respect of any sums to be brought into account under this section.

Textual Amendments

F1 1990 s.45(9).

F2 1990 s.45(9).

F3 Words in s. 438(8) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290(1), Sch. 10 para. 14(21) (with ss. 60, 101(1), 171, 201(3))

Modifications etc. (not altering text)

C1 S. 438 amended (27.7.1993) by 1993 c. 34, s. 78(6)(11)

C2 S. 438(5) amended (27.7.1993) by 1993 c. 34, s. 78(7)

Marginal Citations

M1 Source—1970 s.314(1); 1970(F) Sch.5 Part III 11(3), (6)(c)

M2 Source—1970 s.314(2)

M3 Source—1970 s.314(3)(a); 1970(F) Sch.5 Part III 11(3)

M4 Source—1972 Sch.18 4(1), (2)

M5 Source—1970 s.314(4); 1970(F) Sch.5 Part III 11(3); 1972 Sch.18 4(2)

M6 Source—1987 (No.2) s.39(3)