Taxation of Chargeable Gains Act 1992 section 210A

Ring-fencing of losses

Section 210A restricts how insurance companies can set off capital losses from one category of business against capital gains from another, by ring-fencing losses between BLAGAB (basic life assurance and general annuity business) and non-BLAGAB activities.

• Non-BLAGAB allowable losses can only be offset against the shareholders' share of BLAGAB chargeable gains, and only where those losses exceed non-BLAGAB chargeable gains in the same period
• BLAGAB allowable losses can only be offset against non-BLAGAB chargeable gains after non-BLAGAB losses have been used first, and only up to a calculated "permitted amount" that tracks the shareholders' share of BLAGAB losses over time
• The shareholders' share of BLAGAB gains or losses is determined by reference to the proportion of the company's I minus E profit that is not the policyholders' share; if there is no I minus E profit, the shareholders' share is nil
• Certain items are ignored when calculating the shareholders' share, including deductions for mineral lease capital losses, spread losses on unit trust holdings, and non-trading deficits on loan relationships carried back