2(1)In relation to accounting periods beginning on or after 1st January 1996 and ending after 31st March 1996, section 434A of the Taxes Act 1988 (life assurance business: computation of losses and limitation on relief) shall be amended as follows—U.K.
(a)for subsection (2) there shall be substituted the subsection (2) set out in sub-paragraph (2) below; and
(b)in subsection (2A) (which is inserted by paragraph 23(2) of Schedule 14 to this Act) for “(2)(c)” there shall be substituted “ (2)(a)(ii) ”.
(2)The subsection (2) set out in this sub-paragraph is as follows—
“(2)Where for any accounting period the loss arising to an insurance company from its life assurance business falls to be computed in accordance with the provisions of this Act applicable to Case I of Schedule D—
(a)the loss resulting from the computation shall be reduced (but not below nil) by the aggregate of—
(i)the aggregate amount treated as a charge on income in computing for the period, otherwise than in accordance with those provisions, the profits or losses of the company’s life assurance business; and
(ii)any relevant non-trading deficit for that period on the company’s debtor relationships; and
(b)if the whole or any part of that loss as so reduced is set off—
(i)under section 393A, or
(ii)under section 403(1),
any losses for that period under section 436, 439B or 441 shall be reduced to nil, unless the aggregate of those losses exceeds the total of the amounts set off as mentioned in sub-paragraphs (i) and (ii) above, in which case each of those losses shall be reduced by an amount which bears to that total the proportion which the loss in question bears to that aggregate.”
(3)In relation to accounting periods beginning on or after 1st January 1996 and ending on or before 31st March 1996, for subsection (2) of section 434A of the Taxes Act 1988 there shall be substituted the subsection (2) set out in sub-paragraph (2) above, but with the following amendments to paragraph (a), that is to say—
(a)in the words preceding sub-paragraph (i), the words “the aggregate of” shall be omitted;
(b)in sub-paragraph (i), for “aggregate amount treated as a charge on income” there shall be substituted “ amount of interest and annuities treated as charges on income ”; and
(c)sub-paragraph (ii) shall be omitted.