This section has effect for the interpretation of the life assurance provisions of the Corporation Tax Acts.

M2Unless the context otherwise requires—

• F70. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

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

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

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

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

• F43“brought into account” has the meaning given by section 83A of the Finance Act 1989;

• F71“child trust fund business” has the meaning given by section 431BA;

• “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;

• F93“deposit back arrangements” means arrangements by which an amount is deposited by the reinsurer under a contract of reinsurance with the cedant;

• F72“fair value”, in relation to assets, means the amount which would be obtained from an independent person purchasing them or, if the assets are money, its amount;

• F73F94“foreign business assets”, in relation to an insurance company, means assets, other than linked assets, which either—

  1. a

     are shown in the records of the company as being primarily attributable to liabilities of the company's foreign business, or

  2. b

     are attributable, under the law of a country or territory outside the United Kingdom, to a permanent establishment of the company in that country or territory through which it carries on foreign business;

  and for this purpose “foreign business” means overseas life assurance business or life reinsurance business to the extent that it consists of the reinsurance of overseas life assurance business;

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

• F51“free assets amount”, in relation to an insurance company, means the excess of the value of the assets of the company's long-term business F95, other than any structural assets (within the meaning of section 83XA of the Finance Act 1989), over the aggregate of —

  1. a

     the value of the liabilities of that business,

  2. b

     any money debts (within the meaning of F103Part 5 of CTA 2009 (see section 303 of that Act)) of the company not within paragraph (a) above which are owed in respect of that business, and

  3. c

     the amount of the shareholders' excess assets within the meaning given by section 432A(8)(b));

• F62“General Prudential Sourcebook” means the General Prudential Sourcebook made by the Financial Services Authority under the Financial Services and Markets Act 2000 M3;

• F74“gross roll-up business” has the meaning given by section 431EA;

• F75“the I minus E basis” means the basis under which a company carrying on life assurance business is charged to tax on the relevant profits (within the meaning of section 88(3) of the Finance Act 1989) of that business otherwise than under F104section 35 of CTA 2009 (charge on trade profits);

• F76“immediate needs annuities business” means business which consists of the effecting or carrying out of immediate needs annuities (within the meaning of section 725 of ITTOIA 2005);

• F77“individual savings account business” has the meaning given by section 431BB;

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

• F18F36F78“insurance business transfer scheme” means—

  1. a

     a scheme falling within section 105 of the Financial Services and Markets Act 2000, including an excluded scheme falling within Case 2, 3 F92, 4 or 5 of subsection (3) of that section, or

  2. b

     a scheme which would fall within that section but for subsection (1)(b) 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,

  F63but does not include an insurance special purpose vehicle;

• F64“the Insurance Prudential Sourcebook” means the Prudential Sourcebook for Insurers made by the Financial Services Authority under the Financial Services and Markets Act 2000;

• “insurance special purpose vehicle” means any undertaking which assumes risks from insurance or reinsurance undertakings and which fully funds its exposure to such risks through the proceeds of a debt issue or some other financing mechanism where the repayment rights of the providers of such debt or other financing mechanism are subordinated to the reinsurance obligations of the undertaking;

• F47F65. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F79“internal linked fund”, in relation to an insurance company, means an account—

  1. a

     to which linked assets are appropriated by the company, and

  2. b

     which may be divided into units the value of which is determined by the company by reference to the value of those assets;

• F44F52. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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

• F48“liabilities”, in relation to an insurance company, means—

  1. a

     the mathematical reserves of the company as determined in accordance with F66section 1.2 of the Insurance Prudential Sourcebook, and

  2. b

     liabilities of the company (whose value falls to be determined in accordance with F67section 1.3 of the General Prudential Sourcebook) which arise from deposit back arrangements;

  F96. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F80“life assurance business” means business which—

  1. a

     consists of the effecting or carrying out of contracts of insurance which fall within paragraph I, II, III or VII(b) of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, or

  2. b

     is capital redemption business,

  other than immediate needs annuities business;

• F81“the life assurance provisions of the Corporation Tax Acts” means—

  1. a

     the provisions of this Chapter so far as relating to life assurance business, companies carrying on such business and friendly societies, and

  2. b

     any other provisions of the Corporation Tax Acts making separate provision by reference to whether or not the business of a company is or includes life assurance business or any category of business that includes life assurance business;

• F105“life assurance trade profits provisions” means the provisions applicable for the purposes of the taxation under section 35 of CTA 2009 (charge on trade profits) of the profits of life assurance business carried on by an insurance company;

• 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;

• F37“long-term business” means business which consists of the effecting or carrying out of contracts of long-term insurance;

• “F38long-term insurance fund” means the fund maintained by an insurance company in respect of its F39long-term business F31. . . ;

• F40F49. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• F82“net value”, in relation to any assets, means the excess of the value of the assets over the value of money debts (within the meaning of F106Part 5 of CTA 2009: see section 303 of that Act) attributable to an internal linked fund which are not owed in respect of liabilities;

• F83“non-profit company”, in relation to a period of account, means a company carrying on long-term business where, at the end of the period—

  1. a

     none of the liabilities of that business, or

  2. b

     none but an insignificant proportion of those liabilities,

  are with-profits liabilities;

• F84“non-profit fund” means a fund that is not a with-profits fund;

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

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

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

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

• F85. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

• “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 F41Financial Services Authority under section 9.6 of the Prudential Sourcebook (Insurers)F97(and does not include the Forms mentioned in Rule 9.3(5)).

• F45“period of account” means the period covered by a periodical return;

• F86“PHI business” means long-term business other than life assurance business (including the reinsurance of such long-term business);

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

• F42“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;

• F27F87“reinsurance” includes retrocession;

• F53“shareholders' excess assets” has the meaning given by section 432A(8)(b));

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

• F12F50“value”, in relation to an asset of an insurance company, means the value of the asset as determined in accordance with F68section 1.3 of the General Prudential Sourcebook, as read with section 2.1 of the Insurance Prudential Sourcebook;

• F88“with-profits fund” has the meaning given by the Prudential Sourcebook (Insurers);

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

Where an insurance company becomes an insurance special purpose vehicle otherwise than on the last day of a period of account, it shall be treated as an insurance special purpose vehicle from the beginning of that period.

“BLAGAB profits”, in relation to an accounting period of an insurance company, means the company's BLAGAB income and gains for the period reduced (but not below nil) by the company's BLAGAB deductions for the period.

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—

In this Chapter “capital redemption business” means any business of a company carrying on insurance business in so far as it consists of the effecting on the basis of actuarial calculations, and the carrying out, of contracts under which, in return for one or more fixed payments, a sum or series of sums of a specified amount become payable at a future time or over a period.

The Treasury may by order amend the definition of “insurance business transfer scheme” given by subsection (2) above where it is expedient to do so in consequence of any amendment of section 105 of the Financial Services and Markets Act 2000.

The power conferred by subsection (2ZG) above includes power to make incidental, supplementary, consequential or transitional provisions and savings (including provision amending any provision of the Corporation Tax Acts relating to insurance companies).

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.

The Treasury may by order amend any F111of the life assurance provisions of the Corporation Tax Acts where it is expedient to do so in consequence of the exercise of any power under the Financial Services and Markets Act 2000, in so far as that Act relates to insurance companies.

Where any exercise of a power under that Act has effect for a period ending on or before, or beginning before and ending after, the day on which an order containing an amendment in consequence of that exercise is made under subsection (1) above, the power conferred by that subsection includes power to provide for the amendment to have effect in relation to that period.

The Treasury may by order make provision as to the application of the Corporation Tax Acts in relation to insurance special purpose vehicles.

F110. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

F113. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .