Finance (No.2) Act 1987

6 (1) Subject to the following provisions of this paragraph, where an accounting period of an insurance company carrying on life assurance business is a straddling period, section 26 of the [1974 c. 30.] Finance Act 1974 (life assurance gains etc.) shall apply separately in relation to each of the component periods and—

(a) for the first component period, section 26 shall have effect without regard to subsections (2) and (3) of section 75 of this Act; and

(b) for the second component period, section 26 shall have effect as amended by those subsections.

(2) For the purposes of the separate application of section 26 in accordance with sub-paragraph (1) above, the relevant reliefs (within the meaning of that section) of the straddling period shall be apportioned to the two component periods on a time basis according to their lengths.

(3) If, on a computation under section 26 in accordance with sub-paragraphs (1) and (2) above,—

(a) the policy holders' share of the life assurance gains for one of the component periods exceeds the relevant reliefs apportioned to that period, and

(b) the relevant reliefs apportioned to the other component period exceed the policy holders' share of the life assurance gains of that period,

the excess for the component period referred to in paragraph (a) above shall be treated for the purposes of this paragraph as reduced or, as the case may be, extinguished by deducting from that excess so much of the excess referred to in paragraph (b) above as does not exceed it.

(4) Section 26 of the Finance Act 1974 shall not apply to the straddling period taken as a whole.