LAM11030 - Long-term business fixed capital: meaning of long-term business fixed capital: FA12/S137

The legislation at FA12/S137 provides the meaning of “long-term business fixed capital” (LTBFC) for a life insurance company.

An asset forms part of a company’s LTBFC if it meets the following criteria:

  • it is held for the purposes of the long-term business, and
  • it is a structural asset.

An asset will be held for the purposes of the long-term business if it is held to support the life assurance business or other business which consists of carrying out contracts of long-term insurance. This will include permanent health insurance (PHI) business.

For guidance on structural assets see LAM11040.

On transition to the new life tax regime, which commenced on 1 January 2013, assets previously treated for tax purposes as not held for the long-term insurance business (i.e. regarded for tax purposes as in a company’s shareholder fund at 31 December 2012) were grandfathered into LTBFC regardless of whether or not they were structural assets (FA12/SCH17/PARA35). LAM11050 deals with grandfathered assets.