Taxes Consolidation Act 1997 section 707

Management expenses

Section 707 provides for the deduction of management expenses in computing the profits of a life assurance company taxed on the income less expenses (I–E) basis, subject to a minimum tax floor based on a notional Case I computation.

• A life assurance company taxed on the I–E basis may deduct management expenses under section 83, but must net off against them any repayments, refunds, reinsurance commissions, fines, fees, and profits from reversions.
• Management expenses are ring-fenced by class of business: pension business, general annuity business, and basic life assurance business are each treated as separate businesses, and excess expenses may only be carried forward against the same class.
• The deduction for management expenses may not reduce the company's corporation tax below the amount that would have been payable had the life business been taxed at the standard rate of corporation tax under Case I of Schedule D (the notional Case I floor).
• Where management expenses are restricted by the notional Case I floor, the unrelieved excess is carried forward for set-off in subsequent accounting periods.