1(1)Section 431 of the Taxes Act 1988 shall be amended as follows.
(2)In subsection (2)—
(a)in the definition of “general annuity business”, after the words “pension business” there shall be inserted the words “or overseas life assurance business”; and
(b)there shall be inserted in the appropriate places in alphabetical order—
““basic life assurance business” means life assurance business other than general annuity business, pension business and overseas life assurance business;”
““closing” and “opening”, in relation to a period of account, refer respectively to the position at the end and at the beginning of the period and, in relation to an accounting period, refer respectively to the position at the end and at the beginning of the period of account in which the accounting period falls;”
““closing liabilities” includes liabilities assumed at the end of the period of account concerned in consequence of the declaration of reversionary bonuses or a reduction in premiums;”
““industrial assurance business” has the same meaning as in the Insurance Companies Act 1982;”
““investment reserve”, in relation to an insurance company, means the excess of the value of the assets of the company’s long term business fund over the liabilities of the long term business;”
““liabilities”, in relation to an insurance company, means the liabilities of the company estimated as for the purposes of its periodical return (excluding any that have fallen due or been reinsured and any not arising under or in connection with policies or contracts effected as part of the company’s insurance business);”
““linked assets” means assets of an insurance company which are identified in its records as assets by reference to the value of which benefits provided for under a policy or contract are to be determined;”
““long term business” has the meaning given by section 1(1) of the Insurance Companies Act 1982;”
““long term business fund” means the fund maintained by an insurance company in respect of its long term business or, where the company carries on both ordinary long term business and industrial assurance business, either or both (as the context may require) of the two funds so maintained;”
““ordinary long term business” and “ordinary life assurance business” mean respectively long term business and life assurance business that is not industrial assurance business;”
““overseas life assurance business”—
(a)in the case of life assurance business other than reinsurance business, means business with a policy holder or annuitant not residing in the United Kingdom the policy or contract for which was effected at or through a branch or agency outside the United Kingdom where life assurance business is carried on; and
(b)in the case of reinsurance business, means business the contract for which was effected at or through a branch or agency outside the United Kingdom where none, or no significant part, of the reinsurance business carried on relates to life assurance business with policy holders or annuitants residing in the United Kingdom;”
““overseas life assurance fund” shall be construed in accordance with Schedule 19AA;”
““value”, in relation to assets of an insurance company, means the value of the assets as taken into account for the purposes of the company’s periodical return;”
““with-profits liabilities” means liabilities in respect of policies or contracts under which the policy holders or annuitants are eligible to participate in surplus;”.
(3)After subsection (2) there shall be inserted—
“(2A)Linked assets shall be taken to be linked solely to long term business of a particular category if, and only if, all (or all but an insignificant proportion) of the policies or contracts providing for the benefits concerned are policies or contracts the effecting of which constitutes the carrying on of business of that category.”
(4)In subsection (3)(b), after the words “other annuity business” there shall be inserted the words “that is not overseas life assurance business”.