Taxes Consolidation Act 1997 Schedule 32, paragraph 24

Transitional Provisions Arising from Amendments Made to the System of Taxation of Life Assurance Companies by Finance Act, 1993

Paragraph 24 of Schedule 32 dealt with the interaction between the transitional deemed disposal rules for life assurance companies introduced by the Finance Act 1993 and the computation of loss relief on unrelieved profits under section 713.

• The Finance Act 1993 changed the basis of taxation of life assurance companies from 1 January 1993, widening the charge to tax to include both realised and unrealised income and gains, and reducing the applicable tax rates.
• As a transitional measure, assets of life assurance companies (excluding gilts) were deemed to have been sold and reacquired on 31 December 1992, and any resulting net gains or losses were spread over the following seven years.
• Where any portion of the spread net chargeable gain fell into an accounting period ending on or after 6 April 1997, that amount was required to be deducted from the company's unrelieved profits for that period when computing loss relief under section 713.
• The effect was to prevent a life assurance company from claiming loss relief on profits that were themselves attributable to the transitional spread of deemed disposal gains.