Finance Act 1989

[F1 85A Excess adjusted [F2 life assurance trade] profits U.K.

(1) Where for any accounting period an insurance company is charged to tax under the I minus E basis in respect of its life assurance business, the company shall be chargeable on any excess adjusted [F3 life assurance trade profits under the charge to corporation tax on income].

(2) “Excess adjusted [F4 life assurance trade] profits” means any amount by which—

(a) the adjusted [F4 life assurance trade] profits (see subsection (3)), exceeds

(b) the relevant amount (see subsection (5)).

(3) “The adjusted [F5 life assurance trade profits]” means the amount that would be the profits of the company's life assurance business for the accounting period if—

(a) computed in accordance with the [F6 life assurance trade profits provisions], and

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

(4) The adjustment in respect of losses is a deduction of the amount which, disregarding section 434A(2)(a) of the Taxes Act 1988, would fall to be [F7 relieved under section 45 of the Corporation Tax Act 2010] against the company's income for the accounting period if the company had always been charged to tax under [F8 section 35 of the Corporation Tax Act 2009].

(5) The relevant amount (which may be a negative amount) is found by—

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

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

[F9 (6) “The relevant income” means—

(a) the company's BLAGAB income and gains for the accounting period and [F10 non-taxable distributions received by the company in the accounting period] so far as referable (in accordance with section 432A of the Taxes Act 1988) to the company's basic life assurance and general annuity business (but excluding any amount within this section), and

(b) profits of the company chargeable F11 ... under section 436A of the Taxes Act 1988 (gross roll-up business) for the accounting period.]

[F12 (6A) In this section “non-taxable distribution” means—

(a) a distribution that is exempt for the purposes of Part 9A of the Corporation Tax Act 2009 (company distributions), and

(b) does not include any amount withheld from the distribution on account of tax payable under the laws of a territory outside the United Kingdom.]

(8) “The relevant aggregate” means the sum of—

(a) 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,

(b) any non-trading deficit on the company's loan relationships [F13 under Part 5 of the Corporation Tax Act 2009] which is produced for the accounting period in relation to the company's basic life assurance and general annuity business F14 ... , and

(c) any amount which in pursuance of a claim under [F15 section 389(1) of the Corporation Tax Act 2009] is carried back to the accounting period and F16 ... applied in reducing profits of the company for the accounting period.

(9) The Treasury may by regulations provide—

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

(b) 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).

(10) Regulations under subsection (9) may include provision having effect in relation to times before they are made.]

Textual Amendments

F1 S. 85A inserted (with effect in accordance with s. 39(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 8 para. 14 (with Sch. 8 Pt. 2)

F2 Words in s. 85A heading substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(8) (with Sch. 2 Pts. 1, 2)

F3 Words in s. 85A(1) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(2) (with Sch. 2 Pts. 1, 2)

F4 Words in s. 85A(2) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(3) (with Sch. 2 Pts. 1, 2)

F5 Words in s. 85A(3) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(4)(a) (with Sch. 2 Pts. 1, 2)

F6 Words in s. 85A(3)(a) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(4)(b) (with Sch. 2 Pts. 1, 2)

F7 Words in s. 85A(4) substituted (with effect in accordance with s. 1184(1) of the amending Act) by Corporation Tax Act 2010 (c. 4), s. 1184(1), Sch. 1 para. 213 (with Sch. 2)

F8 Words in s. 85A(4) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(5) (with Sch. 2 Pts. 1, 2)

F9 S. 85A(6) substituted for s. 85A(6)(7) (with effect in accordance with Sch. 17 para. 18(6) of the amending Act) by Finance Act 2008 (c. 9), Sch. 17 para. 18(3)

F10 Words in s. 85A(6)(a) substituted (with effect in accordance with Sch. 14 para. 31 of the amending Act) by Finance Act 2009 (c. 10), Sch. 14 para. 16(2)

F11 Words in s. 85A(6)(b) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(6), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F12 S. 85A(6A) inserted (with effect in accordance with Sch. 14 para. 31 of the amending Act) by Finance Act 2009 (c. 10), Sch. 14 para. 16(3)

F13 Words in s. 85A(8)(b) inserted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(7)(a)(i) (with Sch. 2 Pts. 1, 2)

F14 Words in s. 85A(8)(b) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(7)(a)(ii), Sch. 3 Pt. 1 (with Sch. 2 Pts. 1, 2)

F15 Words in s. 85A(8)(c) substituted (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(7)(b)(i) (with Sch. 2 Pts. 1, 2)

F16 Words in s. 85A(8)(c) repealed (with effect in accordance with s. 1329(1) of the amending Act) by Corporation Tax Act 2009 (c. 4), s. 1329(1), Sch. 1 para. 349(7)(b)(ii) (with Sch. 2 Pts. 1, 2)