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HMRC internal manual

General Insurance Manual

Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Companies that had previously elected not to take a tax deduction

Under ICTA88/S444BA insurers could elect to waive all or part of the tax deduction for amounts transferred into an equalisation reserve, and carry that amount forward to set off against future transfers out of the reserve (see GIM7240).


  1. such an election has been made for an accounting period ending before 1 January 2016, and
  2. at the end of the last accounting period of the company ending before 1 January 2016 there is an amount to be carried forward to the company’s next accounting period


FA12/S26(8) provides that the amount that would be carried forward  is to be deducted from the amount of the equalisation reserve as it stood at the end of the accounting period in (b) above.