Finance Act 1994

5 (1) Section 434 of the Taxes Act 1988 (franked investment income etc.) shall be amended as follows.

(2) In subsection (1) after “income of” there shall be inserted “, or foreign income dividends arising to,”.

(3) In subsection (2) after “income of” there shall be inserted “, and foreign income dividends arising to,”.

(4) The following subsections shall be inserted after subsection (3A)—

“(3B) The policy holders' share of foreign income dividends received in respect of investments held in connection with a company’s life assurance business shall be left out of account in determining, under subsection (7) of section 13, the foreign income dividends forming part of the company’s profits for the purposes of that section.

(3C) The policy holders' share of any income or chargeable gain arising in respect of investments held in connection with a company’s life assurance business shall be left out of account in ascertaining any foreign source profit of the company for the purposes of Chapter VA of Part VI.

(3D) The policy holders' share of foreign income dividends received in respect of investments held in connection with a company’s life assurance business shall be left out of account in ascertaining, for the purposes of sections 246F(1) and (3) and Schedule 13, the amount of the foreign income dividends received by the company.”

(5) In subsection (6A) the word “and” at the end of paragraph (a) shall be omitted and after that paragraph there shall be inserted—

“(aa) “the policy holders' share” of any foreign income dividends is so much of the income they represent as is not the shareholders' share within the meaning of that section,

(ab) “the policy holders' share” of any income (other than franked investment income) is so much of that income as is not the shareholders' share within the meaning of that section,

(ac) “the policy holders' share” of any chargeable gain is so much of that gain as is equal to the amount that, if the gain were income, would not be the shareholders' share within the meaning of that section, and”.