Taxation of Chargeable Gains Act 1992 Schedule 7AA paragraph 7

Special rule for gains and losses on deemed annual disposal

Paragraph 7 of Schedule 7AA establishes a special rule governing how chargeable gains and allowable losses arising on a deemed annual disposal are to be treated within the life insurance company taxation framework.

• Where a life insurance company is treated as making a deemed annual disposal of its assets (a notional sale and reacquisition at market value), any resulting gains or losses are subject to special computational rules under this paragraph.
• The paragraph ensures that gains and losses arising on these deemed disposals are correctly allocated and treated for tax purposes, rather than being handled under the ordinary chargeable gains rules that apply to actual disposals.
• This provision sits within the broader Schedule 7AA framework, which modifies how chargeable gains are calculated for life insurance companies to reflect the unique nature of their business and the way their assets are held on behalf of policyholders.
• The rules were amended by the Finance Act 2006 as part of wider reforms to the taxation of life insurance companies, with the changes introduced under section 70(4) and Schedule 26 of that Act.

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