What does section 1223A of the Corporation Tax Act 2009 do?

Section 1223A excludes insurance companies carrying on basic life assurance and general annuity business from the standard management expenses rules in sections 1219 to 1223. These companies must instead apply the separate tax rules set out in Chapter 3 of Part 2 of the Finance Act 2012, which provides a tailored framework for expense treatment.

Does the section 1223A exclusion apply to all of an insurance company's business?

No. The exclusion operates on a proportional basis, applying only so far as the company's business consists of basic life assurance and general annuity business. If the insurance company also carries on other types of investment business, the standard management expenses rules under sections 1219 to 1223 continue to apply to those other activities.

Which rules apply instead of the normal management expenses provisions for basic life assurance business?

Insurance companies with basic life assurance and general annuity business must apply the rules in Chapter 3 of Part 2 of the Finance Act 2012. These rules were introduced as part of a comprehensive overhaul of insurance company taxation and replace the standard management expenses deduction framework for this specific category of business.

How are management expenses split when an insurance company has both basic life assurance and other investment business?

Management expenses relating to basic life assurance and general annuity business are dealt with under Chapter 3 of Part 2 of the Finance Act 2012, not sections 1219 to 1223. Expenses attributable to the company's other investment business continue to be deducted under the standard management expenses provisions in the Corporation Tax Act 2009.

Corporation Tax Act 2009 section 1223A

Exception for basic life assurance and general annuity business

Section 1223A excludes insurance companies carrying on basic life assurance and general annuity business from the normal management expenses rules that apply to companies with investment business.

The standard management expenses provisions (sections 1219 to 1223) do not apply to basic life assurance and general annuity business carried on by insurance companies
The exclusion applies on a business-by-business basis — only the basic life assurance and general annuity portion is carved out
Insurance companies must instead follow the separate rules set out in Chapter 3 of Part 2 of the Finance Act 2012
This provision was introduced by the Finance Act 2012 as part of a broader reform of the taxation of insurance companies

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