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HMRC internal manual

General Insurance Manual

Taxation of general insurance: overview of the accounts

The starting point for the Case I computation is the profit or loss as disclosed in the Profit and Loss account. GIM2000+ explains the accounting treatment of general insurance. The accounts are divided into:

  • a Technical Account, which reflects the underwriting profit derived from premium income and investment income and investment return reallocated from the non-technical account, less claims, operating expenses and changes in provisions
  • a ‘Non-technical Account’ which reflects the investment income and the investment return reallocated to the technical account, and other income and expenses.

For the most part, accounting for general insurance follows fairly orthodox and recognisable lines. For general insurers the accounts are drawn up in accordance with the accounting Regulations, SI2008/410, and the ABI guidelines on accounting for insurance business, known as the ABI SORP. See GIM2040+.

For accounting periods beginning on or after 1 January 2004, accounts of UK insurance companies will be drawn up on the annual basis. For annual accounting see GIM2090.

For earlier periods, or for companies not subject to UK company law, accounts may be drawn up either on the annual or funded basis, depending on the type of business written. For funded accounting see GIM2140.