Income and Corporation Taxes Act 1988

436 Annuity business and pension business: separate charge on profits. U.K.

(1) M1 Subject to the provisions of this section, profits arising to an insurance company from F1 . . . pension business shall be treated as income within Schedule D, and be chargeable under Case VI of that Schedule, and for that purpose—

(a) [F2 that business] shall be treated separately, and

(b) subject to paragraph (a) above, and to subsection (3) below, the profits therefrom shall be computed in accordance with the provisions of this Act applicable to Case I of Schedule D.

(2) Subsection (1) above shall not apply to an insurance company charged to corporation tax in accordance with the provisions applicable to Case I of Schedule D in respect of the profits of its ordinary life assurance business.

(3) M2 In making the computation referred to in subsection (1) above—

(a) [F3 sections 82 and 83 of the Finance Act 1989]shall apply with the necessary modifications and in particular with the omission of all references to policy holders (other than holders of policies referable to pension business) [F4 and of the words “tax or” in section 82(1)(a)];

(b) no deduction shall be allowed in respect of any expenses of management deductible under section 76; F5

(c) there may be set off against the profits any loss, to be computed on the same basis as the profits, which has arisen from pension business F6 . . .in any previous accounting period or year of assessment;

(d) where the computation in question is of profits arising to an insurance company from pension business—

[F7 (i) group income so far as referable to pension business shall be deducted from the receipts to be taken into account,]

(ii) annuities shall be deductible notwithstanding section 337(2);

and the company shall not be entitled to treat as paid out of profits or gains brought into charge to income tax any part of the annuities paid by the company which is referable to pension business; and

(e) distributions which are not qualifying distributions shall not be taken into account where the computation in question is of the profits arising to an insurance company or overseas life insurance company from F8 . . . pension business.

(4) M3 Section 396 shall not be taken to apply to a loss incurred by a company on its F9 . . . pension business.

(5) M4 Nothing in section 128 or 399(1) shall affect the operation of this section.

Textual Amendments

F1 Words in s. 436(1) repealed (for accounting periods beginning on or after 1.1.1992) by Finance Act 1991 (c. 31, SIF 63:1), s. 48, 123, Sch. 7 paras. 4(1)(a), 18, Sch. 19 Pt.V Note 3

F2 Words in s. 436(1)(a) substituted (for accounting periods beginning on or after 1. 1. 1992) by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 paras. 4(1)(b), 18

F3 1989 s.84and Sch.8 para.6and, subject to s.84(6)deemed to have come into force on 14March 1989.Previously

“section 433”.

F4 1990 s.43(2).Subject to 1989 s.84(6)this amendment has effect with respect to accounting periods beginning on or after 1January 1990.

F5 Words repealed by 1989 ss.87(4)and 187and Sch.17 Part IVwith respect to accounting periods beginning on or after 1January 1990. (See 1989 s.87(5)in relation to straddling periods).

F6 Words in s. 436(3)(c) repealed (for accounting periods beginning on or after 1.1.1992) by Finance Act 1991 (c. 31, SIF 63:1), ss. 48, 123, Sch. 7 paras. 4(2)(a), 18 Sch. 19 Pt. V, Note 3

F7 1990 s.41and Sch.6 para.5on and after 1January 1990subject to the commencement provisions of paras.11and 12.Previously

“(i) group income shall be not be taken into account as part of those profits, and”.

F8 Words in s. 436(3)(e) repealed (for accounting periods beginning on or after 1.1.1992) by Finance Act 1991 (c. 31, SIF 63:1), ss. 48, 123, Sch. 7 paras. 4(2)(b), 18, Sch. 19 Pt. V, Note 3

F9 Words in s. 436(4) repealed (for accounting periods beginning on or after 1.1.1992) by Finance Act 1991 (c. 31, SIF 63:1), ss. 48, 123, Sch. 7 paras. 4(3), 18, Sch. 19 Pt. V, Note 3

Modifications etc. (not altering text)

C1 See also 1989 s.43—certain Sch.D computations involving emoluments.

Marginal Citations

M1 Source—1970 s.312(1); 1970(F) Sch.5 Part III 11(3)

M2 Source—1970 s.312(2), 314(5); 1970(F) Sch.5 Part III 11(6)(a)(b); 1972 Sch.18 5(1)(a)

M3 Source—1970 s.312(3); 1970(F) Sch.5 Part III 11(3)

M4 Source—1985 s.72(7)