Income and Corporation Taxes Act 1988

549 Certain deficiencies allowable as deductions. U.K.

M1 (1) Subject to subsection (2) below, where such an excess as is mentioned in section 541(1)(a) or (b) or 543(1)(a)—

(a) would be treated as a gain arising in connection with a policy or contract, and

(b) would form part of an individual’s total income for the year of assessment in which the final year ends,

a corresponding deficiency occurring at the end of the final year shall be allowable as a deduction from his total income for that year of assessment, so far as it does not exceed the total amount treated as a gain by virtue of section 541(1)(d) or 543(1)(c) on the previous happenings of chargeable events.

(2) Except where the deficiency mentioned in subsection (1) above occurs in connection with a contract for a life annuity made after 26th March 1974 [F1 but in an accounting period of the insurance company or friendly society beginning before 1st January 1992,], the deduction allowable under that subsection shall be made only for the purposes of ascertaining the individual’s excess liability, that is to say, the excess (if any) of his liability to income tax over what it would be if all income tax [F2 not chargeable at the lower rate][F3 by virtue of section 1(2)(aa) were chargeable at the basic rate, or (so far as applicable in accordance with section 207A) the lower rate,] to the exclusion of any higher rate.

(3) In this section “final year” has the same meaning as in section 546.

Textual Amendments

F1 Words in s. 549(2) substituted by Finance Act 1991 (c. 31, SIF 63:1), s. 48, Sch. 7 para. 9(4)

F2 Words in s. 549(2) inserted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 19(3)(7)

F3 Words in s. 549(2) substituted (27.7.1993 with effect for the year 1993-94 and subsequent years of assessment) by 1993 c. 34, s. 79, SCh. 6 paras. 6, 25(1)

Marginal Citations

M1 Source-1975 Sch.2 19; 1975 (No.2) s.40