M1This section has effect for the interpretation of this Chapter.

M2Unless the context otherwise requires—

• “annuity business” means the business of granting annuities on human life F48, other than the business of granting immediate needs annuities (within the meaning of section 580C);

• F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F14. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F5F15. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F16. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F17“basic life assurance and general annuity business” has the meaning given by section 431F;

• F44“brought into account” has the meaning given by section 83A of the Finance Act 1989;

• “closing” and “opening”, in relation to a period of account, refer respectively to the position at the end and at the beginning of the period and, in relation to an accounting period, refer respectively to the position at the end and at the beginning of the period of account in which the accounting period falls;

• “closing liabilities” includes liabilities assumed at the end of the period of account concerned in consequence of the declaration of reversionary bonuses or a reduction in premiums;

• F35“contract of insurance” has the meaning given by Article 3(1) of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001 and “contract of long-term insurance” means any contract which falls within Part II of Schedule 1 to that Order;

• F6F33. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F30. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F18F36“insurance business transfer scheme” means a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 or 4 of subsection (3) of that section;

• “insurance company” means—

  1. a

     a person (other than a friendly society) who has permission under Part 4 of the Financial Services and Markets Act 2000 to effect or carry out contracts of insurance, or

  2. b

     an EEA firm of the kind mentioned in paragraph 5(d) of Schedule 3 to that Act or a firm qualifying for authorisation under Schedule 4 to that Act which—

     1. i

        carries on business which consists of the effecting or carrying out of contracts of insurance, and

     2. ii

        carries on that business through a branch or agency in the United Kingdom;

• F45“investment reserve”, in relation to an insurance company, means the excess of the value of the assets of the company’s long-term business over the aggregate of—

  1. a

     the value of the liabilities of that business, and

  2. b

     any money debts (within the meaning of Chapter 2 of Part 4 of the Finance Act 1996) of the company not within paragraph (a) above which are owed in respect of that business;

• F7F34. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “liabilities”, in relation to an insurance company, means the F37long-term liabilities of the company determined for the purposes of the company’s periodical return on actuarial principles in accordance with section 5.6 of the Prudential Sourcebook (Insurers) (excluding any that have been reinsured);

• “life assurance business” includes annuity business;

• F19“life reinsurance business” has the meaning given by section 431C;

• F8F20“linked assets”, and related expressions, shall be construed in accordance with section 432ZA;

• F38“long-term business” means business which consists of the effecting or carrying out of contracts of long-term insurance;

• “F39long-term insurance fund” means the fund maintained by an insurance company in respect of its F40long-term business F31. . . ;

• F41“long-term liabilities” means liabilities of an insurance company arising under or in connection with contracts for long-term business (including liabilities arising from deposit back arrangements within the meaning given by section 11.1 of the Prudential Sourcebook (Insurers));

• F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F9F32. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F22. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F23“overseas life assurance business” has the meaning given by section 431D;

• “overseas life assurance fund” shall be construed in accordance with Schedule 19AA;

• “overseas life insurance company” means an insurance company F10not resident in the United Kingdom but carrying on life assurance business through a branch or agency in the United Kingdom; F24. . .

• F25“pension business” has the meaning given by section 431B;

• “periodical return”, in relation to an insurance company, means a return deposited with the F42Financial Services Authority under section 9.6 of the Prudential Sourcebook (Insurers).

• F46“period of account” means the period covered by a periodical return;

• F43“the Prudential Sourcebook (Insurers)” means the Interim Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000 X1;

• F26. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F27“reinsurance business” includes retrocession business;

• F11F28. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F12“value”, in relation to assets of an insurance company, means the value of the assets as taken into account for the purposes of the company’s periodical return;

• “with-profits liabilities” means liabilities in respect of policies or contracts under which the policy holders or annuitants are eligible to participate in surplus;

Subsections (2ZB) and (2ZC) below apply where an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”).

In subsections (2ZB) and (2ZC) above—

F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F29. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

An insurance company may, in its company tax return for the first accounting period of the company beginning on or after 1 January 2008 in which any of the assets of the company's long-term insurance fund would (apart from this section) be foreign business assets, elect that none of the assets of the company's long-term insurance fund are to be regarded for the purposes of this Act as being foreign business assets.

The election has effect for that accounting period and all subsequent accounting periods of the company.

An election under subsection (1) is irrevocable.