Taxation (International and Other Provisions) Act 2010 section 97

Companies with more than one category of business: restriction of credit

Section 97 restricts the amount of foreign tax credit available to insurance companies that carry on more than one category of long-term business, by apportioning the credit between each category of business.

• This section applies to insurance companies carrying on more than one category of long-term business where foreign tax credit arises on income or gains in an accounting period
• The foreign tax credit allowed against corporation tax for income referable to a particular category of business is capped at a proportionate fraction of the total foreign tax
• The fraction is calculated as RPRI divided by TRI, where RPRI is the relevant income referable to the category of business in question (determined under section 97A) and TRI is the total relevant income
• The effect is that foreign tax credit is spread across categories of business in proportion to the income each category generates, preventing the full credit from being set against just one category