The Insurance Companies ("The Long-term Business Fixed Capital") Regulations 2023 — Corporation Tax
Updated 25 January 2024
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Who is likely to be affected
This measure will impact life insurance companies that carry on long-term business and hold, acquire or dispose of structural assets.
General description of the measure
This measure clarifies which assets are to be regarded for the purposes of section 137 of Finance Act 2012 as being, or as not being, structural assets of an insurance company’s long-term business.
Policy objective
This measure clarifies which assets are to be treated as being, or as not being, structural assets of an insurance company’s long-term business.
Background to the measure
There is currently uncertainty around the meaning of the term ‘structural asset’ in section 137 of Finance Act 2012.
Draft regulations to clarify the meaning were shared with insurance representative bodies and members of a working group for informal consultation during the period from 17 May 2023 to 18 August 2023.
Draft regulations were published for formal consultation from 29 August 2023 to 26 September 2023. Revisions were made to the draft regulations following the feedback received.
Detailed proposal
Operative date
The measure will apply to accounting periods beginning on or after 1 January 2024.
Current law
This instrument exercises the powers conferred by section 137 of the Finance Act 2012. This is the first use of this power.
The legislation covering the taxation of life insurance companies is in Part 2, Finance Act 2012. Section 137 of the Finance Act 2012 sets out the meaning of ‘long-term business fixed capital’.
Proposed revisions
These regulations make provisions which clarify which assets are to be regarded for the purposes of section 137 of Finance Act 2012 as being, or as not being, structural assets of an insurance company’s long-term business.
Summary of impacts
Exchequer impact (£ million)
| 2022 to 2023 | 2023 to 2024 | 2024 to 2025 | 2025 to 2026 | 2026 to 2027 | 2027 to 2028 |
|---|---|---|---|---|---|
| + 5 | + 10 | + 10 | + 10 | + 10 | + 10 |
These figures are set out in Table 5.1 of Autumn Statement 2023 and have been certified by the Office for Budget Responsibility. More details can be found in the policy costings document published alongside Autumn Budget 2023.
Economic impact
This measure is not expected to have any significant macroeconomic impacts.
Impact on individuals, households and families
The proposed changes are expected to have no direct impact on individuals as they only affect businesses. There is expected to be no impact on family formation, stability or breakdown.
Equalities impacts
It is not anticipated that there will be impacts for those in groups sharing protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on life insurance companies. One-off costs for these businesses will include familiarisation with the new rules. There are not expected to be any continuing costs.
Customer experience is expected to stay the same as this measure does not alter how businesses interact with HMRC.
This measure is not expected to impact civil society organisations.
Operational impact (£ million) (HMRC or other)
There are no financial consequences for HMRC as a result of this measure.
Other impacts
Other impacts have been considered and none have been identified.
Monitoring and evaluation
This measure will be kept under review through regular communication with industry representative groups.
Further advice
If you have any questions about this change, please contact the Financial Services Team by email: financialservicesbai@hmrc.gov.uk.