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HMRC internal manual

General Insurance Manual

Double taxation relief: general rules for accounting periods beginning on or after 1 April 2000

Normal rules on credit relief apply

For accounting periods beginning on or after 1 April 2000, foreign tax suffered by life insurance companies in respect of their general insurance business continues to be eligible for relief by way of credit. Relief can be given subject to the normal rules in ICTA88/S797 and elsewhere which limit the amount of credit allowed.

Underlying tax on dividends

Rules for restricting underlying tax were introduced by FA00/SCH30 as amendments to ICTA88/S799 and ICTA88/S801. These will apply to companies carrying on general insurance business, but the onshore pooling and other relieving rules for excess unrelieved foreign tax ICTA88/S806A to ICTA88/S806G will not. This is because dividends received by a general insurer in the course of its business are charged under Case 1 are so are excluded by virtue of ICTA88/S806A (2)(a). As mentioned in GIM12120, ICTA88/S802 & ESCC1 (b) cease to apply for periods beginning on or after 1 April 2000.

Branch profits

The rules set out in GIM12050 onwards continue to apply for accounting periods beginning on or after 1 April 2000. The rules in ICTA88/S806L allowing carry back and forward of excess foreign tax suffered on profits of overseas branches apply to general insurers. However, they are not extended to the creditable taxes that arise from direct insurance with residents of a territory, as in the Australian and New Zealand charges described in GIM12090.

Relief for foreign tax is however extended to UK branches of non-residents, bringing general insurers into line with life assurance companies and banks (ICTA88/S794 (2)(bb)).