bonus payments are made to them,

reversionary bonuses are declared in their favour, or

a reduction is made in the premiums payable by them.

in the case of bonus payments, the amount of the payments,

in the case of declared reversionary bonuses, the amount of the liabilities assumed by the company in consequence of the declaration, and

in the case of a reduction in premiums, the amount of the liabilities assumed by the company in consequence of the reduction.

may make different provision for different cases, and

may include provision having effect in relation to periods of account during which they are made.

at the end of the period of account in question the company has an unappropriated surplus on valuation as shown in the return deposited with the Financial Services Authority under section 9.6 of the Prudential Sourcebook (Insurers) (an “ unappropriated surplus ”), and

the company has not made an election in accordance with F70Rule 9.10(c) of the Prudential Sourcebook (Insurers) covering the period of account in question.

if so much of the unappropriated surplus at the end of the period of account in question as is required to meet the duty of fairness exceeds so much of the unappropriated surplus at the end of that immediately preceding period of account as was required to meet that duty, the excess is allowed as a deduction in calculating the profits for the period of account in question, but

if so much of the unappropriated surplus at the end of that immediately preceding period of account as was required to meet the duty of fairness exceeds so much of the unappropriated surplus at the end of the period of account in question as is required to meet that duty, the excess is to be taken into account as a receipt of the period of account in question.

for periods of account ending before 14th March 1989 (and the first notional period of account, within the meaning of section 82 above as originally enacted) have been excluded, by virtue of section 433 of the Taxes Act 1988, as being reserved for policy holders or annuitants, and

have not before that date either been allocated to or expended on behalf of policy holders or annuitants or been treated as profits of an accounting period on ceasing to be so reserved.

a company which is a non-profit company, or

the non-profit fund of a company which is not a non-profit company,

X shall be added to the closing liabilities of the company for the relevant period of account; and

XA shall be brought into account as a trading receipt of the company for each subsequent period of account until the total sum of the amounts so brought into account is equal to X (and if that total sum would otherwise exceed X, the excess shall be ignored).

where the relevant period of account ends before 1st April 2007, the whole of the relevant amount;

where the relevant period of account ends on or after 1st April 2007 but before 1st January 2008, two-thirds of the relevant amount;

where the relevant period of account ends on or after 1st January 2008, one-third of the relevant amount.

where X is the whole of the relevant amount, one-third of X;

where X is two thirds of the relevant amount, one-half of X;

where X is one third of the relevant amount, the whole of X.

a period of account of the transferor beginning immediately after the last period of account ending before the transfer and ending immediately before the transfer;

a period of account of the transferor beginning immediately after the transfer.

is irrevocable; and

is to be made by notice to an officer of Revenue and Customs no later than the end of the period of 28 days beginning with the day following that on which the transfer takes place.

the aggregate of all the amounts that would have been brought into account under section 82D(2)(b) above for periods of account of the transferor subsequent to the transfer if the transfer had not taken place shall be brought into account as a trading receipt of the transferor for the period of account ending immediately before the transfer; and

section 82D(2)(b) above shall have no effect in relation to subsequent periods of account of the transferor.

in the case of a transfer of the whole of the long-term business, no amount shall be brought into account under section 82D(2)(b) above;

in the case of a transfer of part of the long-term business, the amount to be so brought into account shall be reduced by the appropriate amount mentioned in section 82F(4) below.

an insurance business transfer scheme has effect to transfer long-term business from one person (“the transferor”) to another (“the transferee”); and

the transferor does not make an election under section 82E(4) above.

the reference in subsection (2)(b) of that section to subsequent periods of account included a reference to periods of account of the transferee ending on or after the transfer; and

the reference in that subsection to the company included a reference to the transferee.

the numerator is the liabilities of the transferor to policy holders and annuitants transferred to the transferee; and

the denominator is the liabilities of the transferor to policy holders and annuitants transferred to all the transferees.

investment income receivable before deduction of tax,

an increase in the value of non-linked assets,

an increase in the value of linked assets, F65...

other income; F64or

business transfers-in.

section 80(5) of the Finance Act 1996 (taxation of loan relationships),

paragraph 1(2) of Schedule 26 to the Finance Act 2002 (taxation of profits from derivative contracts), and

paragraph 1(3) of Schedule 29 to that Act (gains and losses in respect of intangible fixed assets).

comprises notional income for the period of account (see subsections (2AA) and (2AB)),

represents an inter-fund transfer (see subsections (2AC) and (2AD)),

comprises a business transfer-in that is not brought into account in a revenue account prepared for the purposes of Chapter 9 of the Prudential Sourcebook (Insurers) in respect of the whole of the company's long-term business,

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

consists of interest paid under section 826 of the Taxes Act 1988 (interest on tax overpaid) in respect of a repayment or payment relating to an accounting period of the company ending before 1st July 1999;

it represents income which has not been received, and is not receivable, from another person, and

a corresponding notional expense of the same amount is brought into account in the period of account;

is not deductible in computing the profits of the company in respect of its life assurance business in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D, but

had it represented an amount paid or payable to another person, would have been so deductible.

one or more inter-fund transfers (“transfers-in”) are made into a fund and one or more inter-fund transfers (“transfers-out”) are made out of the fund, and

were brought into account for any period of account, but

were not taken into account as receipts of the period of account under subsection (2) above.

assets of the company’s long-term insurance fund are transferred by the company to another person (“the transferee”),

the transferee assumes, as a result of the transfer, a liability representing a debenture loan which, immediately before the transfer, was a liability of that fund, and

the liability does not, as a result of the transfer, become a liability of any long-term insurance fund of the transferee,

an increase in the value of structural assets includes any amount by which their fair value when they cease to be structural assets, or come to be held otherwise than in any of the company's non-profit funds, exceeds their admissible value at the end of the preceding period of account, and

a decrease in the value of structural assets includes any amount by which the admissible value of the assets at the end of the period of account in which they become structural assets, or come to be held in any of the company's non-profit funds, is less than their historic cost.

shares, debts and loans the value of which is required to be entered in lines 21 to 24 of Form 13 in the periodical return (UK insurance dependants and other insurance dependants), and

assets of such other descriptions as are specified by regulations made by the Treasury.

as a receipt (if it is a positive amount), or

as an expense (if it is a negative amount),

in a case within paragraph (a) of that subsection, the period of account in which the asset ceases to be a structural asset or comes to be held otherwise than in any of the company's non-profit funds, and

in a case within paragraph (b) of that subsection, the period of account in which the asset first comes to be held otherwise than by the company or (where the company is a member of a group) otherwise than by a company which is a member of the group;

in a case where assets become structural assets held in any of the company's non-profit funds by virtue of the commencement of this section, the end of the last period of account of the company beginning before 1st January 2007, and

otherwise, the time when the assets become structural assets held in any of the company's non-profit funds.

where the asset came to be held in any of the company's non-profit funds on acquisition from another person, the consideration given by the company for the acquisition of the asset, and

otherwise, its fair value when it came to be held in any of the company's non-profit funds.

income arising from the asset was (or, had there been any, would have been) referable to any category of long-term business the profits of which fell for that period of account to be computed in accordance with the provisions applicable to Case I of Schedule D, or

the company was charged to tax on the profits of its life assurance business under Case I of Schedule D.

the amount shown in line 51 of Form 14 of its periodical return in respect of the whole of its long-term business for any period of account (“the current period of account”), exceeds

the aggregate amount of the amounts shown in line 51 of Form 14 of its periodical return in respect of its with-profits funds (if any) for that period.

the appropriate line 51 amount of the company for the current period of account (“the current line 51 amount”), and

the aggregate amount of the appropriate line 51 amount of the company for the previous period of account (if any) and the amount of any transfer-in amount of the company for that period.

in the revenue account mentioned in section 83A(2)(a), or

if section 83A(4) is applicable, in the separate revenue account treated as prepared by virtue of that provision.

the F140admissible value of such of the assets of the long-term insurance fund of the company immediately after the transfer as were assets of F141a non-profit fund of the transferor immediately before the transfer, exceeds

the amount of any business transfer-in brought into account in accordance with section 83(2)(e) in relation to the transfer.

is irrevocable, and

must be made by notice to an officer of the Board on or before the end of the period of 6 months beginning with the day on which that period of account ends.

in the case where no with-profits funds form part of its long-term business for that period, the amount shown in line 51 of Form 14 of its periodical return in respect of the whole of its long-term business for that period, and

in any other case, so much of that amount as exceeds the aggregate amount of the amounts shown in line 51 of Form 14 of its periodical return in respect of its with-profits funds for that period.

any assets (“the added assets”) become assets of its long-term insurance fund but do not become assets of any of its with-profits funds,

the consideration for the acquisition of the added assets does not comprise any assets which, immediately before the acquisition, were assets of its long-term insurance fund,

no amount is shown in respect of the added assets in any of lines 17 to 41 of Form 14 of its periodical return in respect of the whole of its long-term business for the period of account, and

no amount is brought into account for the period of account in consequence of the acquisition of the added assets.

a repayment in respect of a loan is made by the company in the period of account, and

the loan is one in relation to which the company has, for the purposes of step 2, an unrecognised capital amount for that or any other period of account.

a deposit is received by the company from a reinsurer or arises out of insurance operations of the company,

a debenture loan is made to the company, or

an amount is borrowed by the company from a credit institution,

one or more contingent loans have been made to the company at or before that time, and

amounts will or may at some later time become repayable by the company in respect of the contingent loan or contingent loans.

subsection (5) below applies if the company did not have unrepaid contingent loan liabilities at the end of the period of account immediately preceding the period of account in question, and

subsection (6) below applies if it did.

if the appropriate amount for the period of account in question exceeds the appropriate amount for the immediately preceding period of account, the excess is allowed as a deduction in calculating the profits for the period of account in question, but

if the appropriate amount for the immediately preceding period of account exceeds the appropriate amount for the period of account in question, the excess is to be taken into account as a receipt of the period of account in question.

any relevant net transfers to shareholders, F82...

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the period of account,

the period of account in which the relevant contingent loan was made to the company, and

any period of account falling between the periods of account mentioned in paragraphs (a) and (b) above,

if amounts will or may at some later time become repayable by the company in respect of only one contingent loan, that contingent loan, and

if amounts will or may at some later time become repayable by the company in respect of more than one contingent loan, whichever of those contingent loans was made to the company first.

an amount becomes repayable under a contingent loan made to the company, and

the amount repayable is brought into account as other expenses for the period of account,

have become repayable in respect of the contingent loan in any earlier period of account, and

have been allowed as a deduction in calculating the profits of the company for any such period.

in a case where the amount taken into account as a receipt of the company under section 83(2) above in relation to the contingent loan or loans in question is an amount brought into account in an account concerned wholly with non-participating business, are to its being brought into account in that account or in any other account concerned wholly with non-participating business, and

in a case where the amount so taken into account is an amount brought into account in an account concerned wholly or partly with participating business, are to its being brought into account in that account or in any other account concerned wholly or partly with participating business.

a transfer to another fund brought into account for a period of account as other expenditure in any account concerned wholly with non-participating business is brought into account as other income in an account concerned wholly or partly with participating business, or

a transfer to another fund brought into account for a period of account as other expenditure in any account concerned wholly or partly with participating business is brought into account as other income in an account concerned wholly with non-participating business,

an account is concerned wholly with non-participating business if it relates exclusively to policies or contracts under which the policy holders or annuitants are not eligible to participate in surplus, and

an account is concerned wholly or partly with participating business if it relates wholly or partly to other policies or contracts.

a revenue account prepared for the purposes of F5Chapter 9 of the Prudential Sourcebook (Insurers) in respect of the whole of the company’s F6long-term business;

any separate revenue account required to be prepared F7under that Chapter in respect of a F68with-profits fund F107... .

the sub-fund forms part of another with-profits fund (“the wider fund”) in respect of which such a separate account is also prepared,

in the case of a company whose life assurance business is mutual business, the sub-fund and each other with-profits fund which forms part of the wider fund are 100:0 funds, and

the account is not prevented from being a recognised account for the purposes of those sections by virtue of subsection (3A) above, but

if paragraph (b) of that subsection were to be omitted, the account would be prevented from being such a recognised account by virtue of that subsection,

the policy holders of the fund are entitled to participate in all the profits of the fund, and

no other persons are entitled to participate in any of the profits of the fund.

of which no other with-profits fund forms part, but

of which a non-profit fund F109... forms part.

the with-profits account shall not be a recognised account for the purposes of those sections, but

there shall be treated as having been required and prepared a further separate revenue account covering so much of the items brought into account in the with-profits account as remains after excluding the items brought into account in that account in respect of the non-profit fund.

a company prepares a revenue account in respect of the whole of its long-term business (“the main account”),

it prepares one or more such separate accounts as are mentioned in subsection (2)(b) above, and

amendments relating to franked investment income, loss relief and group relief; and

amendments consequential on or supplemental to sections 82 and 83 above and sections 85 to 89 below.

which, if F129the profits of the life assurance business were charged under Case I of Schedule D, would be taken into account in computing those profits; and

which would not be within the charge to tax (except under Case I of Schedule D) apart from this section;

any premium; F58...

any sum received by virtue of a claim under an insurance contract(including a re-insurance contract); or

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

any sum which is not within the charge to tax (except under Case I of Schedule D) because of an exemption from taxF73; or

any payment received under the Financial Services Compensation Scheme to enable the company to meet its obligations to policy holders.

in the case of a repayment or refund of acquisition expenses, the acquisition expenses fell within section 86 below,

in the case of a reinsurance commission, the policy or contract reinsured under the arrangement in respect of which the commission is paid constitutes basic life assurance and general annuity business, and

in any other case, it is income which, if it were income from an asset, would by virtue of section 432A of the Taxes Act 1988 (apportionment of insurance companies' income) be referable to basic life assurance and general annuity business.

the adjusted Case I profits (see subsection (3)), exceeds

the relevant amount (see subsection (5)).

computed in accordance with the provisions applicable to Case I of Schedule D, and

adjusted in respect of losses (see subsection (4)).

taking the relevant income (see subsection (6)), and

deducting from it the relevant aggregate (see subsection (8)).

any income (including distributions received from companies resident in the United Kingdom) referable (in accordance with section 432A of the Taxes Act 1988) to the company's basic life assurance and general annuity business for the accounting period,

any chargeable gains referable (in accordance with section 432A of that Act) to the company's basic life assurance and general annuity business for the accounting period (see subsection (7)), and

any profits of the company chargeable for the accounting period under Case VI of Schedule D under section 436A of that Act.

the expenses deduction (see Step 8 in section 76(7) of the Taxes Act 1988) in the case of the company for the accounting period,

any non-trading deficit on the company's loan relationships which is produced for the accounting period in relation to the company's basic life assurance and general annuity business by a separate computation under paragraph 2(1) of Schedule 11 to the Finance Act 1996, and

any amount which in pursuance of a claim under paragraph 4(3) of that Schedule is carried back to the accounting period and (in accordance with paragraph 4(5) of that Schedule) applied in reducing profits of the company for the accounting period.

that, in circumstances prescribed by the regulations, the charge imposed by this section for an accounting period may be reduced or eliminated, and

that the amount by which the charge is reduced, or (where the charge is eliminated) the amount of the charge, is instead imposed for a subsequent accounting period (or part of the amount is instead imposed for more than one subsequent accounting period).

commissions (however described), other than commissions for persons who collect premiums from house to house,

any other expenses payable solely for the purpose of the acquisition of business,

so much of any other expenses payable partly for the purpose of the acquisition of business and partly for other purposes as are properly attributable to the acquisition of business,

the securing on or after 14th March 1989 of the payment of increased or additional premiums in respect of a policy of insurance issued in respect of an insurance already made (whether before, on or after that date) F12and

the securing, in an accounting period beginning on or after 1st January 1992, of the payment of increased or additional consideration in respect of an annuity contract already made (whether in an accounting period beginning before, or on or after, that date).

including the whole of those expenses at Step 1,

making any reduction in those expenses which is required at Step 2, and

deducting any amount of reinsurance commission or any repayment or refund (in whole or in part) that falls for the period to be charged to tax under section 85 above,

Effect is given to this subsection at Step 6 (which requires the deduction of six-sevenths of the adjusted amount of the acquisition expenses for the period).

a further fraction of the adjusted amount of those expenses is to be relieved under that section for each succeeding accounting period after the base period, until the whole of the adjusted amount has been relieved,

the fraction is one-seventh, except that for any accounting period of less than a year the fraction is to be proportionately reduced, and

the relief is given by including that fraction of the adjusted amount at paragraph (b) of Step 8,

the fraction of the adjusted amount of the acquisition expenses for the base period which would otherwise fall to be relieved in accordance with subsection (8) above, exceeds

the balance of that adjusted amount which has not been so relieved for earlier accounting periods,

the policy holders’ share of the relevant profits for any accounting period, or

where the business is mutual business, the whole of those profits,

amounts falling in respect of any non-trading deficits on the company’s loan relationships to be brought into account in that period in accordance with paragraph 4 of Schedule 11 to the Finance Act 1996,F62and

the F131expenses deduction given by Step 8 in F88section 76(7) of the Taxes Act 1988.

income and chargeable gains referable F55(in accordance with section 432A of the Taxes Act 1988) to the company’s basic life assurance and general annuity business, F76... F77and

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

profits of the company chargeable under Case VI of Schedule D under section 436A of the Taxes Act 1988 (gross roll-up business)

any allowable losses so referable accruing to the company in the accounting period, and

so far as they have not been allowed as a deduction from chargeable gains in any previous accounting period, any allowable losses so referable previously accruing to the company.

in a case where there are no Case I profits of the company for the period in respect of its life assurance business, the amount of the relevant profits, and

in any other case, the amount arrived at in accordance with subsection (1A) below.

deducting from any profits of the company for the period chargeable under Case VI of Schedule D under section 436A of the Taxes Act 1988 so much of the Case I profits of the company for the period in respect of its life assurance business as does not exceed the amount of any profits of the company for the period so chargeable, and

deducting any remaining Case I profits of the company for the period in respect of its life assurance business from any BLAGAB profits of the company for the period.

amounts falling in respect of any non-trading deficits on the company’s loan relationships to be brought into account in that period in accordance with paragraph 4 of Schedule 11 to the Finance Act 1996, and

the F113expenses deduction given by Step 8 in section 76(7) of the Taxes Act 1988.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

the shareholders’ share of any F20... F35distributions received from companies resident in the United Kingdom in the period which areF21referable F60(in accordance with section 432A of the Taxes Act 1988) to the company’s basic life assurance and general annuity businessF22, and

the shareholders’ share of any foreign income dividends arising to the company in the period F23which are referable to the company’s basic life assurance and general annuity business.

“foreign income dividends” shall be construed in accordance with Chapter VA of Part VI;

the shareholders’ share of any foreign income dividends is so much of the income they represent as is the shareholders’ share.

the company’s investment income from the assets of its long-term F25insurance fund together with its other income, apart from premiums;

any increase in the value (whether realised or not) of those assets;

expenses payable by the company;

interest payable by the company;

the company becomes an insurance special purpose vehicle, and

regulations made under section 84 of the Finance Act 2005 do not apply to it,

the fund for future appropriations shown in the company’s IAD accounts, or

the unallocated divisible surplus shown in the company’s IAS accounts,