Capital Allowances Act 2001 section 256

Different giving effect rules for BLAGAB

Section 256 sets out how capital allowances and balancing charges are given effect for companies carrying on basic life assurance and general annuity business (BLAGAB) that are taxed under the income less expenses (I–E) basis.

• Applies to companies carrying on BLAGAB that are charged to tax under the I–E rules
• Capital allowances attributable to BLAGAB are treated as deemed BLAGAB management expenses for the relevant chargeable period
• Balancing charges attributable to BLAGAB are treated as taxable income receipts of an equivalent amount, subject to corporation tax on income
• This mechanism ensures allowances and charges feed into the I–E computation rather than being dealt with through normal trading profit rules