Income and Corporation Taxes Act 1988

[F3 432C Section 432B apportionment: non-participating funds U.K.

(1) This section specifies the extent to which the net amount is referable to life assurance business or to gross roll-up business.

(2) In this section “the net amount” means the aggregate of the amounts brought into account—

(a) as investment income,

(b) as an increase in the value of assets, or

(c) as other income,

less the aggregate of the amounts brought into account as a decrease in the value of assets.

(3) To the extent that the net amount is attributable to—

(a) assets linked to life assurance business, or

(b) foreign [F4 business] assets,

it is referable to life assurance business.

(4) There is also referable to life assurance business the appropriate fraction of so much of the net amount as is not attributable to linked assets or foreign [F4 business] assets.

(5) For the purposes of subsection (4) above “the appropriate fraction” is—

where—

A is the mean of the opening and closing liabilities of the relevant business so far as referable to life assurance business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of assets linked to the relevant business so far as so referable and foreign [F4 business] assets; and

B is the mean of the opening and closing liabilities of the relevant business so far as referable to PHI business, reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to PHI business.

(6) But if the denominator found in accordance with subsection (5) above is nil, the appropriate fraction for the purposes of subsection (4) above is such fraction as is just and reasonable.

(7) To the extent that the net amount is attributable to—

(a) assets linked to gross roll-up business, or

(b) foreign [F4 business] assets,

it is referable to gross roll-up business.

(8) There is also referable to gross roll-up business the relevant fraction of so much of the net amount as is not attributable to linked assets or foreign [F4 business] assets.

(9) For the purposes of subsection (8) above “the relevant fraction” is—

where—

C is the mean of the opening and closing liabilities of the relevant business so far as referable to gross roll-up business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the aggregate of the mean of the opening and closing net values of any assets linked to gross roll-up business and foreign [F4 business] assets; and

D is the mean of the opening and closing liabilities of the relevant business so far as referable to basic life assurance and general annuity business or PHI business (but taking that mean to be nil if it would otherwise be below nil), reduced (but not below nil) by the mean of the opening and closing net values of any assets linked to either of those categories of business.

(10) But if the denominator found in accordance with subsection (9) above is nil, the relevant fraction for the purposes of subsection (8) above is such fraction as is just and reasonable.

(11) For the purposes of this section, so much of the net amount—

(a) as is brought into account as other income in an internal linked fund of the company, and

(b) as is not attributable to assets of that fund,

is to be treated as linked to a category of business to the same extent as income attributable to an asset of the fund would, by virtue of section 432ZA, be referable to that category of business.]

Textual Amendments

F3 S. 432C substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 17 (with Sch. 7 Pt. 2)

F4 Words in s. 432C(3)-(5)(7)-(9) substituted (with effect in accordance with Sch. 17 para. 10(6)(7) of the amending Act) by Finance Act 2008 (c. 9), Sch. 17 para. 10(3)(b)

Modifications etc. (not altering text)

C1 Ss. 432B-432G applied (1.4.2010 with effect in accordance with s. 381(1) of the affecting Act) by Taxation (International and Other Provisions) Act 2010 (c. 8), s. 102(3) (with Sch. 9)