Finance Act 2012

76 Meaning of “adjusted BLAGAB management expenses”

This section explains for the purposes of section 73 how to calculate the adjusted BLAGAB management expenses of the company for the accounting period.

• Step 1

  Calculate the ordinary BLAGAB management expenses of the company referable to the accounting period (see sections 77, 81 and 82).

  In making the calculation ignore so much of those expenses as is deductible under other relevant rules (see section 78(2)).

  If the company is an overseas life insurance company, see also section 96.

• Step 2

  If the expenses calculated in accordance with step 1 include acquisition expenses for the purposes of section 79, reduce the amount given by step 1 in accordance with the rules in that section (which, in the typical case, provide for six-sevenths of the adjusted amount of those expenses to be disallowed for the accounting period and relieved instead as deemed BLAGAB management expenses for the next six accounting periods).

• Step 3

  Calculate the total amount of any deemed BLAGAB management expenses for the accounting period (see section 78(3)).

  For this purpose ignore any amounts that have already been included in step 1.

• Step 4

  Find the basic amount by adding together the amount given by the calculation required by step 1 (adjusted, where relevant, in accordance with step 2) and the amount given by the calculation required by step 3.

  Adjust the basic amount by deducting from it any expenses reversed in the accounting period (see section 78(4)) and any BLAGAB trade loss relieved for the accounting period (see section 78(5)).

• Step 5

  Add together any amounts carried forward as expenses from the previous accounting period to the accounting period as a result of section 73 or 93 to give the carried-forward amount.

  Add the carried-forward amount to the basic amount or, as the case may be, the basic amount adjusted in accordance with step 4.

  The resulting amount is the amount of adjusted BLAGAB management expenses of the company for the accounting period.