Finance Act 2012 (c. 14)

PART 2 Insurance companies carrying on long-term business

CHAPTER 5 I - E profit: policyholders’ rate of tax

Tax rate on policyholders’ share of I - E profit

105 Meaning of “BLAGAB non-taxable distributions” and “shareholders’ share”

(1) This section explains for the purposes of section 104 what is meant by—

• “BLAGAB non-taxable distributions”, and

• “the shareholders’ share” of BLAGAB non-taxable distributions.

(2) Non-taxable distributions are “BLAGAB” non-taxable distributions if they are referable, in accordance with Chapter 7, to the company’s basic life assurance and general annuity business.

(3) The “shareholders’ share” of the BLAGAB non-taxable distributions receivable by the company in the accounting period is the relevant proportion of those distributions.

(4) The relevant proportion is—

where—

• BTP is the amount of the BLAGAB trade profit of the company for the accounting period,

• BNTD is the amount of the BLAGAB non-taxable distributions receivable by the company in the accounting period, and

• I is the total of the amounts given by the calculations required by steps 1 to 3 in section 73 (I - E basis: income referable to BLAGAB) in relation to the company’s basic life assurance and general annuity business for the accounting period.

(5) If BTP exceeds BNTD + I, the shareholders’ share of the BLAGAB non-taxable distributions receivable by the company in the accounting period is the whole of those distributions.