Finance Act 2008

“BLAGAB profits” etc

18 (1) In section 431 of ICTA (interpretative provisions relating to insurance companies), after subsection (2YA) insert—

“(2YB) “BLAGAB profits”, in relation to an accounting period of an insurance company, means the company’s BLAGAB income and gains for the period reduced (but not below nil) by the company’s BLAGAB deductions for the period.

(2YC) “BLAGAB income and gains”, in relation to an accounting period of an insurance company, means the aggregate of—

(a) income chargeable for the period under Schedule A or Case III, V or VI of Schedule D so far as referable (in accordance with section 432A) to the company’s basic life assurance and general annuity business, and

(b) chargeable gains so far as so referable accruing to the company in the period, but (subject to section 210A of the 1992 Act) after deducting—

(i) any allowable losses so referable and so accruing, and

(ii) so far as they have not been allowed as a deduction from chargeable gains in any previous accounting period, any allowable losses so referable previously accruing to the company.

(2YD) “BLAGAB deductions”, in relation to an accounting period of an insurance company, means the aggregate of—

(a) amounts falling in respect of any non-trading deficits on the company’s loan relationships to be brought into account in the period in accordance with paragraph 4 of Schedule 11 to the Finance Act 1996, and

(b) the expenses deduction given by Step 8 in section 76(7) for the period.”

(2) In section 755A(11C) of that Act (treatment of chargeable profits and creditable tax apportioned to company carrying on life assurance business), omit paragraph (b) and the “and” before it.

(3) In section 85A of FA 1989 (excess adjusted Case I profits), for subsections (6) and (7) substitute—

“(6) “The relevant income” means—

(a) the company’s BLAGAB income and gains for the accounting period and distributions received by the company in the accounting period from companies resident in the United Kingdom so far as referable (in accordance with section 432A of the Taxes Act 1988) to the company’s basic life assurance and general annuity business (but excluding any amount within this section), and

(b) profits of the company chargeable under Case VI of Schedule D under section 436A of the Taxes Act 1988 (gross roll-up business) for the accounting period.”

(4) In section 88 of that Act (meaning of “policy holders' share of profits”), for subsections (3) to (3B) substitute—

“(3) For the purposes of subsection (1) above the relevant profits of a company for an accounting period consist of the aggregate of—

(a) the company’s BLAGAB profits for the period, and

(b) profits of the company chargeable under Case VI of Schedule D under section 436A of the Taxes Act 1988 (gross roll-up business) for the period.”

(5) Omit—

(a) section 89(1B) of FA 1989,

(b) in section 210A(10)(a) of TCGA 1992, “(within the meaning of section 89(1B) of the Finance Act 1989)”,

(c) paragraph 21(2) of Schedule 8 to FA 1995,

(d) paragraph 2(1) of Schedule 11, and paragraph 56 of Schedule 14, to FA 1996,

(e) paragraph 6(1) of Schedule 33 to FA 2003,

(f) in paragraph 9(2) of Schedule 7 to FA 2004, paragraphs (a) to (c) and the words from”; and, in consequence of” to the end, and

(g) paragraphs 58 and 67(2) of Schedule 7, and paragraphs 15(3) and 16(2) of Schedule 8, to FA 2007.

(6) The amendments made by this paragraph have effect in relation to accounting periods beginning on or after 1 January 2008.