Taxes Consolidation Act 1997 section 715

Annuity business: separate charge on profits

Section 715 sets out how the profits of an assurance company from pension business and general annuity business are computed and charged to corporation tax.

• Pension business and general annuity business profits are charged under Case IV of Schedule D but computed using Case I rules, with each class of business treated separately.
• Investment gains and losses (realised or unrealised) on funds backing policyholder liabilities are brought into the profit computation to the extent reflected in the actuary's valuation of those liabilities.
• No deduction is allowed for management expenses, but losses from a previous accounting period may be carried forward against profits of the same class of business.
• Annuities referable to excluded annuity business cannot be treated as charges on income but are deductible as trading expenses of the life assurance business.