Taxes Consolidation Act 1997 section 708

Acquisition expenses

Section 708 restricts the relief for expenses incurred by life assurance companies in acquiring new business (for example, brokers' commissions) by requiring those expenses to be spread over seven years.

• Acquisition expenses are the part of a life company's management expenses spent on acquiring basic life assurance business (excluding pension business and general annuity business), reduced by refunds and reinsurance commissions.
• Management expenses only qualify as acquisition expenses if they have been disbursed in the period and would otherwise be deductible as management expenses.
• Only one-seventh of the acquisition expenses incurred in a base period may be deducted in that period, with a further one-seventh deductible in each of the next six accounting periods until the full amount has been relieved.
• If an accounting period is shorter than one year, the one-seventh fraction is proportionately reduced, and in the final period only the unclaimed balance may be deducted.