Finance Act 1989

88 Corporation tax: policy holders’ fraction of profits. U.K.

(1) Subject to subsection (2) [F1 and section 88A] below, in the case of a company carrying on life assurance business, the rate of corporation tax chargeable for any financial year on

[F2 (a) the policy holders’ share of the relevant profits for any accounting period, or

(b) where the business is mutual business, the whole of those profits,

shall] be deemed to be the rate at which income tax at the basic rate is charged for the year of assessment which begins on 6th April in the financial year concerned.

(2) Subsection (1) above does not apply in relation to profits charged under Case I of Schedule D.

[F3 (3) For the purposes of subsection (1) above, the relevant profits of a company for an accounting period are the income and gains of the company’s life assurance business reduced by the aggregate amount of—

[F4 (aa) amounts falling in respect of any non-trading deficits on the company’s loan relationships to be brought into account in that period in accordance with paragraph 4 of Schedule 11 to the Finance Act 1996,]

(a) expenses of management falling to be deducted under section 76 of the Taxes Act 1988, and

(b) charges on income,

so far as referable to the company’s life assurance business.]

(4) In determining for the purposes of section 13 of the Taxes Act 1988 (small companies’ relief) the profits and basic profits (within the meaning of that section) of an accounting period of a company carrying on life assurance business, the policy holders’ [F5 share] of the company’s relevant profits for that period [F6 , or where the business is mutual business the whole of those profits,] shall be left out of account.

(5) This section has effect with respect to the profits of a company for accounting periods beginning on or after 1st January 1990 (including the 1990 component period); and, for this purpose, the profits of the 1990 component period shall be taken to be that portion of the profits of the straddling period which the length of the 1990 component period bears to the length of the straddling period.

Textual Amendments

F1 Words in s. 88(1) inserted (29.4.1996 with effect for the financial year 1996 and subsequent financial years) by 1996 c. 8, s. 73(4), Sch. 6 para. 26(1)(4)

F2 Words in s. 88(1) substituted (and deemed always to have had effect) by Finance Act 1990 (c. 29), s. 45(1)(10)

F3 S. 88(3) substituted (1.5.1995) by 1995 c. 4, s. 51, Sch. 8 Pt. I para. 21(2) (with Sch. 8 paras. 55(2), 57(1))

F4 S. 88(3)(aa) inserted (29.4.1996) by 1996 c. 8, s. 104, Sch. 14 para. 56 (with savings in Ch. II, ss. 80-105 of Pt. IV)

F5 Word in s. 88(4) substituted (and deemed always to have had effect) by Finance Act 1990 (c. 29), s. 45(2)(10)

F6 Words in s. 88(4) inserted (and deemed always to have had effect) by Finance Act 1990 (c. 29), s. 45(2)(10)