LAM07220 - Trade profits: BLAGAB trade profits: expenses or receipts for deferred policyholder tax: FA12/S107

As indicated in LAM07210, the adjustment to BLAGAB trade profits allowed for deferred policyholder tax must be wholly attributable to policyholder tax.

An amount is wholly attributable to policyholder tax if:

• it is a BLAGAB matter, and
• it is calculated wholly by reference to the policyholder rate of tax

A BLAGAB matter is defined in FA12/S108(3) as:

• excess BLAGAB management expenses
• deferred acquisition expenses deferred in accordance with FA12/S79
• any other expense which will be relieved in the future under the I-E rules
• BLAGAB allowable losses under TCGA92/S210A
• spread deemed disposal gains or losses on TCGA92/S212 assets
• unrealised gains and losses on capital gains assets

Excess BLAGAB management expenses will include the reversal of any minimum profits charge calculated in accordance with FA12/S93 and treated as carried forward management expenses under FA12/S94 (see LAM07230).

Note that if an amount is included in the calculation of policyholders’ deferred tax for a period and that amount ceases to be wholly attributable to policyholder tax in a future period, a reversal of the tax deduction taken in the earlier period should be made.