Section 442A of the Income and Corporation Taxes Act 1988 ("section 442A") (inserted by paragraph 34 of Schedule 8 to the Finance Act 1995) provides for the taxation of the investment return on an insurance policy or annuity contract which is the subject of a reinsurance arrangement by the insurance company concerned. These Regulations make provision in relation to the calculation of the investment return, and also exclude certain reinsurance arrangements and policies from the operation of section 442A. Finally the Regulations exclude certain reinsurance business from specified provisions of the Income and Corporation Taxes Act 1988 concerned with reinsurance business.
Regulation 1 provides for citation, commencement and effect and regulation 2 contains definitions.Regulations 3 to 6 provide for the methods of calculation of the amount of the investment return for each accounting period during which the reinsurance arrangement is in force, and regulation 7 prescribes the percentage rate of return for the purposes of calculating that amount for consecutive accounting periods other than the final accounting period.
Regulation 8 prescribes, for the purpose of ascertaining the investment return in each accounting period, the dates on which payments of premium, commission or other amounts under the reinsurance arrangement are to be treated as made.Regulation 9 excludes specified reinsurance arrangements, and regulation 10 excludes specified policies and contracts, from the operation of section 442A.
Regulation 11 excludes certain reinsurance business from section 431C of the 1988 Act (meaning of "life reinsurance business") and regulation 12 excludes certain reinsurance business from section 439A of that Act (taxation of pure reinsurance business). (Sections 431C and 439A were inserted by paragraphs 2 and 26 respectively of Schedule 8 to the Finance Act 1995).By virtue of Schedule 8 to the Finance Act 1995, these Regulations have effect in relation to accounting periods beginning on or after 1st January 1995.
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