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GIM7000 | Equalisation reserves

From HM Revenue & Customs · General Insurance Manual

This section sets out the tax treatment of ‘equalisation reserves’, which general insurers were required to maintain for certain lines of general (non-life) insurance business for accounting periods ending on or after 23 December 1996 and ending before 1 January 2016. The Prudential Regulation Authority (PRA) regulatory rules on these reserves referred to ‘equalisation provisions’ because they were treated by the PRA as liabilities rather than as reserves, but the tax legislation still referred to ‘equalisation reserves’. This section of the General Insurance Manual refers to ‘reserves’ rather than ‘provisions’.

The relevant legislation was contained at ICTA88/S444BA to ICTA88/S444BD and the Insurance Companies (Reserves) (Tax) Regulations 1996, SI1996/2991.

This legislation was repealed by FA12/S26. The repeal was effective for accounting periods ending on or after 1 January 2016, the date that the Solvency II Directive (2009/138/EC) came into force.

The repeal of the legislation for the tax treatment of equalisation reserves affects general insurance companies who maintain such reserves and corporate and partnership members of Lloyd’s who maintain equivalent reserves in accordance with the Lloyd’s regulations (see LLM3400 et seq.).

Guidance on the FA 2012 changes can be found at GIM7400 onwards.

Contents50 entries

  1. GIM7010Equalisation reserves: background
  2. GIM7020Equalisation reserves: application of the regulatory rules
  3. GIM7030Equalisation reserves: classes of business affected
  4. GIM7040Equalisation reserves: classes other than credit business: limits on transfers in and out
  5. GIM7050Equalisation reserves: classes other than credit business: de minimis limit
  6. GIM7060Equalisation reserves: classes other than credit business: calculation
  7. GIM7070Equalisation reserves: classes other than credit business: creation of the reserve
  8. GIM7080Equalisation reserves: classes other than credit business: ring-fencing
  9. GIM7090Equalisation reserves: classes other than credit business: ring-fencing: maximum level of reserve
  10. GIM7100Equalisation reserves: classes other than credit business: summary of requirements
  11. GIM7110Equalisation reserves: classes other than credit business: example
  12. GIM7120Equalisation reserves: credit business: limits and calculation
  13. GIM7130Equalisation reserves: credit business: de minimis limits
  14. GIM7140Equalisation reserves: annual accounting on an underwriting year basis
  15. GIM7150Equalisation Reserves: cessations and transfers of business
  16. GIM7160Equalisation reserves: cessations and transfers of business: transfers of a block or all of the business
  17. GIM7170Equalisation reserves: regulatory return forms
  18. GIM7180Equalisation reserves: the tax rules
  19. GIM7190Equalisation reserves: the tax rules: tax adjustments to premiums or claims
  20. GIM7200Equalisation reserves: the tax rules: errors in returns or accounts
  21. GIM7210Equalisation Reserves: the tax rules: differences between accounting periods and financial years
  22. GIM7220Equalisation reserves: the tax rules: funded accounting
  23. GIM7230Equalisation reserves: the tax rules: shadow equalisation reserves
  24. GIM7240Equalisation reserves: the tax rules: shadow equalisation reserves: worked example
  25. GIM7250Equalisation reserves: the tax rules: election not to take a tax deduction
  26. GIM7260Equalisation reserves: the tax rules: parts of reserves built up prior to the tax rules
  27. GIM7270Equalisation reserves: the tax rules: cessations
  28. GIM7280Equalisation reserves: the tax rules: insurers not regulated in the UK: non-statutory reserves
  29. GIM7290Equalisation reserves: the tax rules: insurers not regulated in the UK: non-statutory reserves: tax relief for UK branches of EEA insurers
  30. GIM7300Equalisation reserves: the tax rules: insurers not regulated in the UK: non-statutory reserves: tax relief for UK companies trading outside EEA
  31. GIM7310Equalisation reserves: the tax rules: insurers not regulated in the UK: controlled foreign companies
  32. GIM7320Equalisation reserves: the tax rules: insurers not regulated in the UK: UK branches of non-EEA insurers
  33. GIM7330Equalisation reserves: the tax rules: tax credit relief
  34. GIM7340Equalisation reserves: the tax rules: example of apportionment for double taxation relief
  35. GIM7350Equalisation reserves: the tax rules: anti-avoidance
  36. GIM7360Equalisation reserves: the tax rules: mutuals and partial mutuals
  37. GIM7370Equalisation reserves: the tax rules: group regulatory returns
  38. GIM7380Equalisation reserves: recalculation of reserves for tax purposes
  39. GIM7390Equalisation Reserves: International Accounting Standards (IAS)
  40. GIM7400Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016
  41. GIM7410Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Introduction
  42. GIM7420Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Insurer ceasing to trade during transitional period
  43. GIM7430Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Companies that had previously elected not to take a tax deduction
  44. GIM7440Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Election to accelerate receipts
  45. GIM7450Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Transfer of whole or part of the business during the transitional period
  46. GIM7460Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Transfer of the whole business or substantially the whole business: example
  47. GIM7470Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Transfer of part of the business
  48. GIM7480Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Interaction with Double Taxation Relief
  49. GIM7490Repeal of equalisation reserves tax legislation for accounting periods ending on or after 1 January 2016: Interaction with Double Taxation Relief: Examples
  50. GIM7500Repeal of equalisation reserves tax legislation for accounting periods ending on or after1 January 2016: Interaction with Double Taxation Relief: Examples