D7.504 Long-term business general taxation principles
The rules in this division apply for accounting periods beginning before 1 January 2013. For accounting periods beginning on or after 1 January 2013 see Division D7.4.
Insurance business is a trade for taxation purposes1, and the Tax Acts therefore apply to an insurance company in the same way as they apply to any other trading company, except where the law has been modified by special provisions applicable to insurance companies only.
A study of the life assurance provisions of the Corporation Tax Acts, however, is not in itself enough to give an understanding of how life insurance companies are taxed. At the end of the 19th and the beginning of the 20th centuries, a number of important disputes between life insurance companies and HMRC reached the courts and many of the special statutory provisions were originally introduced to modify or, in some cases, to reverse decisions reached by the courts in those cases.
The general principles of life insurance taxation, derived from statute and case law, are as follows:
(a) An insurance company must separate its life insurance