LAM06040 | I-E Profit: Calculation of the tax charge: Determining the policyholders’ share of I-E profit: shareholders’ share of BLAGAB non-taxable distributions (BNTD): FA12/S105

This section provides the rule for determining the amount of BLAGAB non-taxable distributions used to reduce BLAGAB trade profit (see LAM06030) to calculate the adjusted amount of BLAGAB trade profit. This is then used in the comparison required by FA12/S103 (see LAM06020)

Non-taxable distributions are “BLAGAB” non-taxable distributions if they are allocated to BLAGAB in accordance with the company’s commercial allocation method under Chapter 7 of FA12 (see LAM05010).

The shareholders’ share of the BLAGAB non-taxable dividends is the relevant portion of those distributions. The relevant portion is:

BTP

BNTD + I

BTP is the BLAGAB trade profit as determined for tax purposes before taking account of brought forward losses.

BNTD is the amount of BLAGAB non-taxable distributions receivable by the company.

“I” is the total I-E income as calculated under steps 1 to 3 of FA12/S73 (net loan relationship deficits are deducted at step 4, so not relevant to this calculation).

Note that if the BTP exceeds the BNTD + I, the shareholders’ share of the BLAGAB non-taxable distributions is the whole of those distributions. An example of the calculation is provided at LAM06050.