Finance Act 2009

No deduction for capital allocations to with-profits policy holders

2 (1) In section 82 of FA 1989 (calculation of profits), after subsection (2) insert—

“(2A) But amounts are not allowed as such a deduction if they—

(a) are allocated to holders of policies under which they are eligible to participate in surplus,

(b) are of a capital nature, and

(c) are not funded from amounts brought into account as part of total income in line 19 of the revenue account prepared for the purposes of Chapter 9 of the Prudential Sourcebook (Insurers) in respect of the whole of the company’s long-term business.

(2B) For the purposes of subsection (2A) above payments made in connection with the reattribution of inherited estate are to be regarded as being of a capital nature.”

(2) The amendment made by sub-paragraph (1) has effect in relation to amounts allocated on or after 22 April 2009 to holders of policies under which they are eligible to participate in surplus.