PART XII SPECIAL CLASSES OF COMPANIES AND BUSINESSES
C3C4C5CHAPTER I INSURANCE COMPANIES, UNDERWRITERS AND CAPITAL REDEMPTION BUSINESS
Pt. XII Chapter I (ss. 431-458) applied (6.3.1992 with effect as mentioned in s. 289(1)(2) of the amending Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 212(7)(b), 289 (with ss. 60, 101(1), 171, 201(3))
Pt. 12 Ch. 1 modified (s. 431AB treated as inserted) by The Friendly Societies (Modification of the Corporation Tax Acts) Regulations 1997 (S.I. 1997/473), reg. 7A (as inserted (8.4.2004 with effect in accordance with reg. 1 of the amending S.I.) by The Friendly Societies (Modification of the Corporation Tax Acts) (Amendment) Regulations 2004 (S.I. 2004/822), reg. 7)
F1Miscellaneous provisions relating to life assurance business
Cross-heading before s. 434 inserted (with effect in accordance with Sch. 8 para. 57(1) of the amending Act) by Finance Act 1995 (c. 4), Sch. 8 para. 51(4) (with Sch. 8 para. 55(2))
C1C2437 General annuity business.
F7F81A
In the computation, otherwise than in accordance with the provisions applicable to Case I of Schedule D, of the profits for any accounting period of a company’s life assurance business, new annuities paid by the company in that period shall be brought into account by treating an amount equal to the income limit for that period as a sum disbursed as expenses of management of the company for that period.
1C
For the purposes of this section F9(but subject to subsections (1CA) to (1CD) below)—
a
“new annuity” means any annuity, so far as paid under a contract made by an insurance company in an accounting period beginning on or after 1st January 1992 and so far as referable to the company’s basic life assurance and general annuity business;
b
“the income limit” for an accounting period of an insurance company is the difference between—
i
the total amount of the new annuities paid by the company in that accounting period; and
ii
the total of the capital elements contained in the new annuities so paid; and
c
the capital element contained in an annuity shall be determined in accordance with Chapter V of Part XIV, but for this purpose—
i
it is immaterial whether or not an annuitant claims any relief to which he is entitled under that Chapter; and
ii
where, by virtue of subsection (2) of section 657, section 656 does not apply to an annuity, the annuity shall be treated as containing the capital element that it would have contained apart from that subsection.
F101CA
Where a new annuity (“the actual annuity”) is a steep-reduction annuity, the income limit for an accounting period of the company paying the annuity shall be computed for the purposes of this section as if—
a
the contract providing for the actual annuity provided instead for the annuities identified by subsections (1CB) and (1CC) below; and
b
the consideration for each of those annuities were to be determined by the making of a just and reasonable apportionment of the consideration for the actual annuity.
1CB
The annuities mentioned in subsection (1CA)(a) above are—
a
an annuity the payments in respect of which are confined to the payments in respect of the actual annuity that fall to be made before the earliest time for the making in respect of the actual annuity of a reduced payment such as is mentioned in section 437A(1)(c); and
b
subject to subsection (1CC) below, an annuity the payments in respect of which are all the payments in respect of the actual annuity other than those mentioned in paragraph (a) above.
1CC
Where an annuity identified by paragraph (b) of subsection (1CB) above (“the later annuity”) would itself be a steep-reduction annuity, the annuities mentioned in subsection (1CA)(a) above—
a
shall not include the later annuity; but
b
shall include, instead, the annuities which would be identified by subsection (1CB) above (with as many further applications of this subsection as may be necessary for securing that none of the annuities mentioned in subsection (1CA)(a) above is a steep-reduction annuity) if references in that subsection to the actual annuity were references to the later annuity.
1CD
Subsections (1CA) to (1CC) above shall be construed in accordance with section 437A.
1D
In any case where—
a
a payment in respect of an annuity is made by an insurance company under a group annuity contract made in an accounting period beginning before 1st January 1992,
b
the company’s liabilities first include an amount in respect of that annuity in an accounting period beginning on or after that date, and
c
the company’s liability in respect of that annuity is referable to its basic life assurance and general annuity business,
the payment shall be treated for the purposes of this section, other than this subsection, as if the group annuity contract had been made in an accounting period beginning on or after 1st January 1992 (and, accordingly, as payment of a new annuity).
1E
In any case where—
a
a payment in respect of an annuity is made by a reinsurer under a reinsurance treaty made in an accounting period beginning before 1st January 1992,
b
the reinsurer’s liabilities first include an amount in respect of that annuity in an accounting period beginning on or after that date, and
c
the reinsurer’s liability in respect of that annuity is referable to its basic life assurance and general annuity business,
the payment shall, as respects the reinsurer, be treated for the purposes of this section, other than this subsection, as if the reinsurance treaty had been made in an accounting period beginning on or after 1st January 1992 (and, accordingly, as payment of a new annuity).
1F
In this section—
“group annuity contract” means a contract between an insurance company and some other person under which the company undertakes to become liable to pay annuities to or in respect of such persons as may subsequently be specified or otherwise ascertained under or in accordance with the contract (whether or not annuities under the contract are also payable to or in respect of persons who are specified or ascertained at the time the contract is made);
“reinsurance treaty” means a contract under which one insurance company is obliged to cede, and another (in this section referred to as a “reinsurer”) to accept, the whole or part of a risk of a class or description to which the contract relates.
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Definitions in Pt. XII Chapter I (ss. 431-458) applied by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 paras. 16(7), 18