Corporation Tax Act 2009 section 563

Increased non-trading credits for BLAGAB and EEA taxed contracts

Section 563 provides for an uplift to non-trading credits arising on investment life insurance contracts where the insurer has already borne tax on the underlying income and gains.

• Where a company recognises a non-trading credit on a related transaction involving a BLAGAB contract or a contract subject to a comparable EEA tax charge, that credit is increased by a calculated amount
• The increase is determined by the formula: non-trading credit × (appropriate rate ÷ (100 − appropriate rate)), unless fair value accounting applies under section 565
• The appropriate rate is the lower corporation tax rate applicable to certain insurance company profits for the accounting period, or the average of such rates if more than one applies
• The amount of the increase is set off against the company's corporation tax liability for that accounting period