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HMRC internal manual

Corporate Intangibles Research and Development Manual

Core computational rules: CT computation: intangible assets used for life assurance business

Life Assurance Companies - The I-E System

In general, the profits of life assurance companies are not assessed as trade profits even though their activities are trading in nature. Instead, they are taxed under a particular regime known as the I-E system. This is explained in the Life Assurance Manual (LAM).

Because of this, there are special provisions in CTA09/PART8 to cover the position of life insurance companies. These exclude from the scope of Part 8 intangible fixed assets held by a company for the purposes of its life assurance business except:

  • computer software, but subject to:

    • the general exclusion for software treated for accounting purposes as part of the cost of the related hardware - CIRD25140
    • the right to elect to exclude software as described in CIRD25180
  • incoming and outgoing royalties in respect of intangible fixed assets generally as described in CIRD25110 onwards

Debits and credits arising from intangible fixed assets and referable to the life assurance business are dealt with as part of the I-E computation. Details are at LAM4D213.