Finance Act 2012

83General annuity business

(1)This section applies if an insurance company pays qualifying BLAGAB annuities in an accounting period.

(2)An amount equal to the difference between—

(a)the total amount of those annuities paid by the company in the accounting period, and

(b)the total of the amounts exempt under section 717 of ITTOIA 2005 (exemption for part of purchased life annuity payments) contained in those annuities so paid,

is treated for the purposes of section 76 as a deemed BLAGAB management expense for the accounting period.

(3)An annuity is a “qualifying BLAGAB annuity” if—

(a)it is referable to the company’s basic life assurance and general annuity business, and

(b)it is paid under a contract made by the company in an accounting period beginning on or after 1 January 1992 (but see section 85).

(4)For the purposes of this section the amounts exempt under section 717 of ITTOIA 2005 are so much of the payments under the qualifying BLAGAB annuities as would be within the exemption under that section if—

(a)section 718 of ITTOIA 2005 were omitted, and

(b)the exemption under section 717 of ITTOIA 2005 applied in relation to companies as well as individuals.

(5)If a qualifying BLAGAB annuity (“the actual annuity”) is a steep-reduction annuity, the calculations required by subsection (2)(a) and (b) are to be made as if—

(a)the contract for the actual annuity provided instead for the annuities identified below (“the deemed annuities”), and

(b)the consideration for each of the deemed annuities were equal to an apportionment of the consideration for the actual annuity on a just and reasonable basis.

(6)The deemed annuities are—

(a)an annuity the payments in respect of which are confined to payments in respect of the actual annuity that fall to be made at the earliest time for the making in respect of that annuity of a reduced payment within section 84(1)(c), and

(b)an annuity the payments in respect of which are all the payments in respect of the actual annuity other than those mentioned in paragraph (a).

(7)If a deemed annuity within subsection (6)(b) (“the later annuity”) would itself be a steep-reduction annuity, the deemed annuities—

(a)do not include the later annuity, but

(b)include instead the annuities which would be identified by subsection (6) (with as many further applications of this subsection as may be necessary for securing that none of the deemed annuities is a steep-reduction annuity) if references in that subsection to the actual annuity were to the later annuity.

(8)This section needs to be read with section 84 (meaning of “steep-reduction annuity” etc).