Taxation of Chargeable Gains Act 1992

[F1210ARing-fencing of lossesU.K.

(1)[F2Section 2A(1)] has effect in relation to insurance companies subject to the provisions of this section.

[F3(2)Non-BLAGAB allowable losses accruing to an insurance company are allowable as a deduction from the shareholders' share (if any) of the BLAGAB chargeable gains accruing to the company [F4as permitted by subsection (2A)] (but are not otherwise allowable as a deduction from the BLAGAB chargeable gains accruing to the company).]

[F5(2A)The following deductions may be made from the shareholders’ share of the BLAGAB chargeable gains accruing to the company in an accounting period—

(a)any available non-BLAGAB allowable losses accruing to the company in the period may be deducted under section 2A(1)(a), and

(b)after making any deductions within paragraph (a), any available non-BLAGAB allowable losses previously accruing to the company, which have not been allowed as a deduction from chargeable gains accruing in the period or in any previous accounting period, may (subject to section 269ZFC of CTA 2010) be deducted under section 2A(1)(b).

(2B)But those deductions may not reduce the shareholders’ share of BLAGAB chargeable gains below nil.

(2C)The amount of “available non-BLAGAB allowable losses” accruing to a company in an accounting period is the amount by which the non-BLAGAB allowable losses accruing to the company in the accounting period exceed the non-BLAGAB chargeable gains so accruing.]

(3)BLAGAB allowable losses accruing to an insurance company are allowable as a deduction from non-BLAGAB chargeable gains accruing to the company as permitted by the following provisions of this section (and not otherwise).

(4)They are allowable as a deduction from only so much of non-BLAGAB chargeable gains accruing to the company in an accounting period as exceeds the aggregate of—

(a)non-BLAGAB allowable losses accruing to the company in the accounting period, and

(b)non-BLAGAB allowable losses previously accruing to the company which have not been allowed as a deduction from chargeable gains accruing in any previous accounting period.

(5)And they are allowable as a deduction from non-BLAGAB chargeable gains accruing to the company in an accounting period only to the extent that they do not exceed the permitted amount for the accounting period.

(6)The permitted amount for the first accounting period of an insurance company in relation to which this section has effect is the aggregate of—

(a)the F6... shareholders' share for that accounting period of BLAGAB allowable losses accruing to the company in the accounting period F7..., and

(b)the shareholder’s share for the immediately preceding accounting period of BLAGAB allowable losses previously accruing to the company which have not been allowed as a deduction from chargeable gains accruing in that immediately preceding accounting period or any earlier accounting period.

(7)The permitted amount for any subsequent accounting period of the company is arrived at by—

(a)deducting from the permitted amount for the immediately preceding accounting period the amount of any BLAGAB allowable losses allowed as a deduction from non-BLAGAB chargeable gains accruing to the company in the immediately preceding accounting period, and

(b)adjusting the result in accordance with subsection (8) or (9) below.

(8)[F8If there are] BLAGAB chargeable gains accruing to the company in the subsequent accounting period F9..., the amount arrived at under subsection (7)(a) above is reduced by a fraction of which—

(a)the denominator is the BLAGAB allowable losses accruing to the company in any previous accounting period which have not been allowed as a deduction from chargeable gains accruing to the company in any previous accounting period, and

(b)the numerator is so many of those allowable losses as are allowed as a deduction[F10, under step 2 of section 75(1) of FA 2012,] from BLAGAB chargeable gains accruing to the company in the accounting period.

[F11(9)If there are BLAGAB allowable losses accruing to the company in the subsequent accounting period, the amount arrived at under subsection (7)(a) is increased by the shareholders’ share of the amount of those allowable losses.]

[F12(10)For the purposes of this section the “shareholders' share” of BLAGAB chargeable gains or BLAGAB allowable losses accruing to an insurance company in an accounting period is determined as follows.

(10A)If the company has an I - E profit for the accounting period—

(a)find the percentage (including, if applicable, nil) of the I - E profit that is not represented by the policyholders' share of that profit as determined in accordance with section 103 of the Finance Act 2012, and

(b)then multiply that percentage by the amount of the BLAGAB chargeable gains or BLAGAB allowable losses.

The result is the shareholder's share of the BLAGAB chargeable gains or BLAGAB allowable losses.

(10B)If the company does not have an I - E profit for the accounting period, the shareholders' share of the BLAGAB chargeable gains or BLAGAB allowable losses is nil.

(10C)[F13For the purposes of subsections (10A) and (10B)], assume that non-BLAGAB allowable losses cannot be deducted to any extent from BLAGAB chargeable gains (and, accordingly, assume that section 95 is not included in the Finance Act 2012).]

(11)In arriving at [F14the shareholders' share] of chargeable gains accruing to an insurance company under [F15subsections (10) to (10C)] above there is to be ignored—

(a)any deduction under section 202(9) (mineral leases: capital losses),

(b)any reduction under section 213(3) (spreading of losses from deemed disposal of holdings of unit trust etc), and

(c)any amount carried back under [F16section 389(1) of CTA 2009] (non-trading deficit on loan relationships).

F17(12). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(13)In this section—

  • “BLAGAB allowable losses”, in relation to an insurance company, means allowable losses referable[F18, in accordance with Chapter 4 of Part 2 of the Finance Act 2012,] to the company’s basic life assurance and general annuity business, [F19but excluding any allowable losses deducted under step 2 of section 75(1) of FA 2012 in determining the BLAGAB chargeable gains of the company for an accounting period,]

  • “BLAGAB chargeable gains”, in relation to an insurance company, means chargeable gains [F20(as adjusted for allowable losses in accordance with section 75 of FA 2012)] referable[F18, in accordance with Chapter 4 of Part 2 of the Finance Act 2012,] to the company’s basic life assurance and general annuity business,

  • “non-BLAGAB allowable losses”, in relation to an insurance company, means allowable losses of the company which are not BLAGAB allowable losses,

  • “non-BLAGAB chargeable gains”, in relation to an insurance company, means chargeable gains of the company which are not BLAGAB chargeable gains, F21...

  • F21. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F1S. 210A inserted (with effect in accordance with Sch. 33 para. 14(2) of the amending Act) by Finance Act 2003 (c. 14), Sch. 33 para. 14(1)

F2Words in s. 210A(1) substituted (with effect in accordance with Sch. 1 paras. 120, 123 of the amending Act) by Finance Act 2019 (c. 1), Sch. 1 para. 71

F3S. 210A(2) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 80(2)

F4Words in s. 210A(2) inserted (with effect in relation to accounting periods beginning on or after 1.4.2020 of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 paras. 12(2), 42 (with Sch. 4 paras. 43-46)

F5S. 210A(2A)-(2C) inserted (with effect in relation to accounting periods beginning on or after 1.4.2020 of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 paras. 12(3), 42 (with Sch. 4 paras. 43-46)

F6Words in s. 210A(6)(a) omitted (with effect in relation to accounting periods beginning on or after 1.4.2020) by virtue of Finance Act 2020 (c. 14), Sch. 4 paras. 12(4)(a), 42 (with Sch. 4 paras. 43-46)

F7Words in s. 210A(6)(a) omitted (with effect in relation to accounting periods beginning on or after 1.4.2020) by virtue of Finance Act 2020 (c. 14), Sch. 4 paras. 12(4)(b), 42 (with Sch. 4 paras. 43-46)

F8Words in s. 210A(8) substituted (with effect in relation to accounting periods beginning on or after 1.4.2020 of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 paras. 12(5)(a), 42 (with Sch. 4 paras. 43-46)

F9Words in s. 210A(8) omitted (with effect in relation to accounting periods beginning on or after 1.4.2020) by virtue of Finance Act 2020 (c. 14), Sch. 4 paras. 12(5)(b), 42 (with Sch. 4 paras. 43-46)

F10Words in s. 210A(8)(b) inserted (with effect in relation to accounting periods beginning on or after 1.4.2020) by Finance Act 2020 (c. 14), Sch. 4 paras. 12(6), 42 (with Sch. 4 paras. 43-46)

F11S. 210A(9) substituted (with effect in relation to accounting periods beginning on or after 1.4.2020) by Finance Act 2020 (c. 14), Sch. 4 paras. 12(7), 42 (with Sch. 4 paras. 43-46)

F12S. 210A(10)-(10C) substituted for s. 210A(10)(10A) (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 80(3)

F13Words in s. 210A(10C) substituted (with effect in relation to accounting periods beginning on or after 1.4.2020) by Finance Act 2020 (c. 14), Sch. 4 paras. 40, 42 (with Sch. 4 paras. 43-46)

F14Words in s. 210A(11) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 80(4)(a)

F15Words in s. 210A(11) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 80(4)(b)

F16Words in s. 210A(11)(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. 379(3) (with Sch. 2 Pts. 1, 2)

F17S. 210A(12) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 80(5)

F18Words in s. 210A(13) substituted (17.7.2012) by Finance Act 2012 (c. 14), Sch. 16 para. 80(6)(a)

F19Words in s. 210A(13) inserted (with effect in relation to accounting periods beginning on or after 1.4.2020 of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 paras. 12(8)(a), 42 (with Sch. 4 paras. 43-46)

F20Words in s. 210A(13) inserted (with effect in accordance with Sch. 4 para. 42 of the amending Act) by Finance Act 2020 (c. 14), Sch. 4 para. 12(8)(b) (with Sch. 4 paras. 43-46)

F21Words in s. 210A(13) omitted (17.7.2012) by virtue of Finance Act 2012 (c. 14), Sch. 16 para. 80(6)(b)

Modifications etc. (not altering text)