June Budget – Life Insurance Companies
Three changes to the tax rules for life insurance companies have been announced:
- The Government plans to correct a defect in the rules which govern transfers of life insurance business to ensure that an unintended tax charge does not arise when a UK life insurance company transfers long term insurance business to a non-EEA overseas company. The change will apply to transfers taking place on or after 22 June 2010.
- The second change will introduce new regulations to ensure a consistent basis of taxation when life insurance business ceases to be carried on in the UK through a UK company, and starts to be carried on through a UK branch of a company resident elsewhere in the EEA. This change is expected to be effective for periods of account beginning on or after 1 January 2011.
- The final change is an anti-avoidance measure to prevent manipulation to avoid tax on previously unrecognised profits. This measure had already been announced in the March Budget and will apply to transfers of business on or after 24 March 2010.