Commentary

D7.440 Investment return on reinsured BLAGAB

Corporate tax
Corporate tax | Commentary

D7.440 Investment return on reinsured BLAGAB

Corporate tax | Commentary

D7.440 Investment return on reinsured BLAGAB

The rules in this division apply for accounting periods beginning on or after 1 January 2013. For accounting periods beginning before 1 January 2013 see Division D7.5.

The taxation of the profits arising from the reinsurance of life assurance business as part of the company's non-BLAGAB business under the trade profit provisions has the effect of excluding any investment return accruing for the benefit of policyholders from tax in the hands of the reinsurer (the investment return being balanced by an increase in the reinsurer's mathematical reserves). The investment return received by the cedant from an overseas reinsurer will similarly be free of tax in cases where the reinsurer is charged to tax on a profits basis and the payments to the cedant are allowed in full.

In order to preserve the integrity of the I-E basis in these cases, a notional investment return is

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