What does section 1081 of the Corporation Tax Act 2009 provide?

Section 1081 provides that insurance companies carrying on life assurance business are treated as large companies for R&D tax relief purposes. Even if such a company would otherwise qualify as a small or medium-sized enterprise based on its headcount, turnover, or balance sheet total, it must use the large company R&D expenditure credit regime instead of the more generous SME scheme.

Can a life assurance company claim SME R&D tax relief under United Kingdom law?

No. Under section 1081 of the Corporation Tax Act 2009, a company carrying on life assurance business cannot access the enhanced SME R&D relief scheme, regardless of its actual size. It must instead claim R&D expenditure credit under the large company provisions in Chapter 2 of Part 13 of the Act.

Which R&D relief scheme must life assurance companies use under CTA 2009 section 1081?

Life assurance companies must use the R&D expenditure credit regime available to large companies under Chapter 2 of Part 13 of the Corporation Tax Act 2009. This applies even if the company meets the normal SME size criteria, as section 1081 deems it a large company for R&D purposes.

How does section 1081 affect accountants advising life assurance clients on R&D claims?

Accountants advising life assurance clients must always apply the large company R&D rules when preparing R&D tax relief claims, irrespective of the company's headcount, turnover, or balance sheet total. The company's engagement in life assurance business automatically triggers treatment as a large company under section 1081.

Corporation Tax Act 2009 section 1081

Insurance companies treated as large companies

Section 1081 provides that insurance companies carrying on life assurance business are treated as large companies for research and development tax relief purposes, even if they would otherwise qualify as small or medium-sized enterprises.

This section applies to companies that carry on life assurance business during an accounting period
If such a company would otherwise qualify as a small or medium-sized enterprise, it is instead treated as a large company
The effect is that life assurance companies cannot access the more generous SME R&D tax relief scheme and must instead use the large company provisions
This treatment applies specifically for the purposes of the R&D expenditure credit rules in Chapter 2 of Part 13

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