Corporation Tax Act 2009 section 388

Basic rule: deficit set off against income and gains of deficit period

Section 388 sets out the basic rule for how a non-trading loan relationship deficit must be set off against income and gains of a life insurance company's basic life assurance and general annuity business (BLAGAB) in the period the deficit arises.

• A non-trading loan relationship deficit must first be set off against any BLAGAB income and gains of the same period
• The income and gains are reduced by the amount of the deficit set against them
• This set-off is automatic and does not require the company to make a claim
• The reduction is applied before any deduction for the company's adjusted BLAGAB management expenses for that period