20[F1In computing in accordance with the provisions of the Taxes Act 1988 applicable to Case I of Schedule D the profits for any accounting period arising to an insurance company from its life assurance business, or from its gross roll-up business,] no deduction for capital expenditure under paragraph 1 and no land remediation relief under paragraph 12 shall be allowable.
Textual Amendments
F1Words in Sch. 22 para. 20 substituted (with effect in accordance with s. 38(2) of the amending Act) by Finance Act 2007 (c. 11), Sch. 7 para. 72 (with Sch. 7 Pt. 2)
21Paragraphs 22 to 28 apply where [F2an insurance company is charged to tax under the I minus E basis in respect of its life assurance business for any accounting period.]
Textual Amendments
F2Words in Sch. 22 para. 21 substituted (with effect in accordance with Sch. 17 para. 23(8) of the amending Act) by Finance Act 2008 (c. 9), Sch. 17 para. 23(4)
22(1)Sub-paragraph (2) applies if—
(a)land in the United Kingdom is a management asset of a company,
(b)at the time of acquisition by the company all or part of the land is or was in a contaminated state, and
(c)in any accounting period, the company incurs qualifying expenditure in respect of the land.
(2)Where this sub-paragraph applies, the company [F3may treat the amount of its qualifying expenditure as expenses payable which fall to be brought into account for that accounting period at Step 1 in section 76(7) of the Taxes Act 1988].
(3)For the purposes of this paragraph, the amount of a company’s qualifying expenditure in an accounting period is the amount of its qualifying land remediation expenditure in that period [F4reduced by the amount (if any) which by virtue of paragraph (a) of Step 1 in section 76(7) of the Taxes Act 1988 is not to be brought into account at that Step as expenses payable for that period].
(4)A company is not entitled to relief under this paragraph in respect of expenditure on land all or part of which is in a contaminated state, if the land is in that state wholly or partly as a result of any thing done or omitted to be done at any time by the company or a person with a relevant connection to the company.
(5)For the purposes of this paragraph, land is a management asset of a company if it is—
(a)an asset provided for use or used for the management of life assurance business carried on by the company, or
(b)an asset in respect of which expenditure is being incurred with a view to such use by the company.
Textual Amendments
F3Words in Sch. 22 para. 22(2) substituted (with effect in accordance with Sch. 17 para. 23(8) of the amending Act) by Finance Act 2008 (c. 9), Sch. 17 para. 23(5)
F4Words in Sch. 22 para. 22(3) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 60(2)
23(1)If a company is entitled to relief under paragraph 22 for an accounting period in respect of its qualifying expenditure, sub-paragraph (2) shall apply for the purposes of section 76 of the Taxes Act 1988 (computing profits of company carrying on life assurance business: [F6deduction in respect of expenses payable]).
(2)Where this sub-paragraph applies, the company may (on making a claim) treat an amount equal to 150% of the actual amount of the qualifying expenditure (as determined in accordance with paragraph 22(3)) [F7as expenses payable which fall to be brought into account for that period at Step 1 in section 76(7) of the Taxes Act 1988].
Textual Amendments
F5Sch. 22 para. 23 heading substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 61(4)
F6Words in Sch. 22 para. 23(1) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 61(2)
F7Words in Sch. 22 para. 23(2) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 61(3)
24(1)A company may claim a life assurance company tax credit under this paragraph if in an accounting period it has a “qualifying loss”.
(2)A company has a “qualifying loss” for this purpose if in an accounting period—
(a)the company is entitled to relief under paragraph 22, and
(b)an amount falls to be carried forward to a succeeding accounting period under [F8section 76(12) F9...] of the Taxes Act 1988 (carrying forward [F10unrelieved expenses] F9... where such expenses F9... exceed amount of profits from which deductible).
[F11(3)In determining for the purposes of sub-paragraph (2)(b) whether there is an amount which falls to be carried forward under subsection (12) F12... of section 76 of the Taxes Act 1988, there shall be disregarded any amounts brought forward from an earlier accounting period and treated for the purposes of that section as expenses payable which fall to be brought into account for the period in question—
(a)in accordance with Step 7 in subsection (7) of that section, by virtue of a previous application of subsection (12) or (13) of that section, or
(b)in accordance with Step 3 in subsection (7) of that section, by virtue of paragraph 4(4) of Schedule 11 to the Finance Act 1996 (loan relationships deficit carried forward and so brought into account).]
(4)The amount of the qualifying loss is equal to the lesser of—
(a)150% of the related qualifying expenditure, and
(b)such amount as is determined in accordance with sub-paragraph (3) to be an amount which falls to be carried forward as described in sub-paragraph (2)(b).
Textual Amendments
F8Words in Sch. 22 para. 24(2)(b) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 62(2)(a)
F9Words in Sch. 22 para. 24(2)(b) omitted (with effect in accordance with Sch. 17 para. 23(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 17 para. 23(6)(b)
F10Words in Sch. 22 para. 24(2)(b) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 62(2)(b)
F11Sch. 22 para. 24(3) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 62(3)
F12Words in Sch. 22 para. 24(3) omitted (with effect in accordance with Sch. 17 para. 23(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 17 para. 23(6)(a)
25(1)The amount of the life assurance company tax credit to which a company is entitled for an accounting period is equal to 16% of the amount of the qualifying loss for the period.
(2)The Treasury may by order substitute for the percentage for the time being specified in sub-paragraph (1) such other percentage as they think fit.
(3)An order under sub-paragraph (2) may make such incidental, supplemental, consequential or transitional provision as the Treasury think fit.
26Paragraph 16 (payment) and paragraph 18 (tax credit not to be treated as income) shall have effect in relation to life assurance company tax credits with the substitution for each reference to a land remediation tax credit of a reference to a life assurance company tax credit.
27[F14(1)For the purposes of section 76 of the Taxes Act 1988, the total amount which may—
(a)be carried forward under subsection (12) F15... of that section from an accounting period in which the company claims a life assurance company tax credit, and
(b)be brought into account F16... in accordance with Step 7 in subsection (7) of that section,
is treated as reduced by the amount of the expenses payable surrendered.]
(2)For the purposes of sub-paragraph (1) the amount of the [F17expenses payable] surrendered is—
(a)where the maximum amount of life assurance company tax credit was claimed, the whole of the qualifying loss for that period;
(b)where less than the maximum amount was claimed, a corresponding proportion of the qualifying loss for that period.
The “maximum amount” here means the amount specified in paragraph 25(1).
Textual Amendments
F13Sch. 22 para. 27 heading substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 63(4)
F14Sch. 22 para. 27(1) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 63(2)
F15Words in Sch. 22 para. 27(1)(a) omitted (with effect in accordance with Sch. 17 para. 23(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 17 para. 23(7)(a)
F16Words in Sch. 22 para. 27(1)(b) omitted (with effect in accordance with Sch. 17 para. 23(8) of the amending Act) by virtue of Finance Act 2008 (c. 9), Sch. 17 para. 23(7)(b)
F17Words in Sch. 22 para. 27(2) substituted (with effect in accordance with art. 1(2) of the amending S.I.) by The Finance Act 2004, Sections 38 to 40 and 45 and Schedule 6 (Consequential Amendment of Enactments) Order 2004 (S.I. 2004/2310), art. 1(2), Sch. para. 63(3)
28If in an accounting period—
(a)a company has a qualifying loss, and
(b)by virtue of that qualifying loss, a payment is made to the company in respect of a life assurance company tax credit,
the related qualifying expenditure shall be treated as if it were expenditure excluded for the purposes of capital gains tax under section 39 of the Taxation of Chargeable Gains Act 1992 (c. 12).