Taxes Consolidation Act 1997 section 595

Life assurance policy or deferred annuity contract entered into or acquired by company

Section 595 provides that where a company makes an investment gain on a life assurance policy or deferred annuity contract, that gain is charged to corporation tax, with a credit for the income tax already suffered at source under the life assurance company's Income less Expenses (I–E) regime.

• A "relevant gain" is a chargeable gain on a disposal of a life policy or deferred annuity contract entered into or acquired by a company on or after 11 April 1994, but excludes disposals arising from the death, disablement or disease of the assured and disposals by persons who are not the original beneficial owner
• The exemption from capital gains tax on life policy gains under section 593(2) is withdrawn for companies, so that investment-type gains on life policies held by companies are taxable
• A relevant gain is treated as the net amount of a gain from which corporation tax has been deducted at the standard rate of income tax; the gross amount is taxed as a chargeable gain, with the deemed tax deducted available as a credit against the company's corporation tax liability
• Policies commenced on or after 1 January 2001 ("new basis business") are excluded from this regime and instead fall within the exit tax regime in Part 26, Chapter 5