LAM10300 - Excluded Business: Reinsurance of BLAGAB treated as BLAGAB in reinsurer: FA12/S57(2)(e)
FA12/S57(2) defines BLAGAB as anything other than the categories of business listed at S57(2)(a)-(g). Included in that list is
‘reinsurance of life assurance business other than excluded business’
Where a reinsurer writes excluded business, it is treated as BLAGAB and the reinsurer must apply the I-E rules to the income and gains relating to the business reinsured unless FA12/S67 applies as the business is substantially non-BLAGAB.
Where the reinsurance of BLAGAB is not ‘excluded business’ all of the profits will be subject to the normal corporation tax rules and no special rules apply.
Regulations implemented under the powers in S57(3) define excluded business
- for reinsurance arrangements entered into on or after 1st June 2018 ‘The Insurance Companies (Taxation of Re-insurance Business) Regulations 2018’ (SI2018/538).
- for reinsurance arrangements entered into on or after 29 November 1995 but before 1st June 2018 Insurance Companies (Taxation of Reinsurance Business) Regulations 1995 (SI1995/1730).
Note that following the introduction of the FA12 regime, the 1995 regulations were not repealed and continued to apply to business written up to 1st June 2018 FA12/S57 and S90. That follows from the transitional rules in FA12/SCH17/PARA36. This guidance does not consider the effect of the primary legislation which applied prior to FA12. Detailed guidance on the rules in SI1995/1730, amended by SI2003/2573, can be found at old LAM4D.101 onwards.