Income and Corporation Taxes Act 1988

[F1440A Securities.U.K.

(1)Subsection (2) below applies where the assets of an insurance company include securities of a class all of which would apart from this section be regarded for the purposes of corporation tax on chargeable gains as one holding.

(2)Where this subsection applies—

[F2(a)so many of the securities as are identified in the company’s records as securities by reference to the value of which there are to be determined benefits provided for under policies or contracts the effecting of all (or all but an insignificant proportion) of which constitutes the carrying on of—

[F3(i)basic life assurance and general annuity business, or

(ii)gross roll-up business,]

shall be treated for the purposes of corporation tax as a separate holding linked solely to that business,]

(c)F4. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(d)so many of the securities as are included in the company’s [F5long-term insurance fund] but do not fall within [F6paragraph (a)] shall be treated for those purposes as a separate holding which is an asset of that fund (but not of [F7the description mentioned in that paragraph]), and

(e)any remaining securities shall be treated for those purposes as a separate holding which is not of any of the descriptions mentioned in the preceding paragraphs.

(3)Subsection (2) above also applies where the assets of an insurance company include securities of a class and apart from this section some of them would be regarded as a 1982 holding, and the rest as a [F8section 104 holding], for the purposes of corporation tax on chargeable gains.

(4)In a case within subsection (3) above—

(a)the reference in any paragraph of subsection (2) above to a separate holding shall be construed, where necessary, as a reference to a separate 1982 holding and a separate [F8section 104 holding], and

(b)the questions whether such a construction is necessary in the case of any paragraph and, if it is, how many securities falling within the paragraph constitute each of the two holdings shall be determined in accordance with paragraph 12 of Schedule 6 to the Finance Act 1990 and the identification rules applying on any subsequent acquisitions and disposals.

(5)Section [F9105 of the 1992 Act]] shall have effect where subsection (2) above applies as if securities regarded as included in different holdings by virtue of that subsection were securities of different kinds.

[F10F11(6)In this section—

• “1982 holding” has the same meaning as in section 109 of the 1992 Act;

• “ [F8section 104 holding]” has the same meaning as in section 104(3) of that Act; and

• “securities” means shares, or securities of a company, and any other assets where they are of a nature to be dealt in without identifying the particular assets disposed or acquired.]

[F10(7)In a case where the profits of a company’s life assurance business are charged to tax in accordance with Case I of Schedule D this section has effect with the modification specified in section 440B(4).]