LAM06050 | I-E Profit: Calculation of the tax charge: Determining the policyholders’ share of I-E profit - example

Consider a set of computations with the following figures:

FA12/S105 example: shareholders’ share of BLAGAB non-taxable distributions

(BTP) 800,000 x (BNTD) 150,000 = 75,000

(BTND) 150,000 + (I) 1,450,000

Therefore the Shareholders’ share of BLAGAB non-taxable distributions in this example is 75,000.

FA12/S103 example: the policyholders’ share of the I-E profit

Where there is an I-E profit, a comparison is made between the I-E profit and the adjusted amount of BLAGAB trade profit for the period (see LAM06030) to calculate the policyholders’ share of the I-E profit (if any).

• Scenario 1: if the company does not have a BLAGAB trade profit for that period, the policyholders’ share of the I-E profit is the whole of that profit;

• Scenario 2: if the adjusted amount of a company’s BLAGAB trade profit is less than the I-E profit for the period, the difference between those amounts represents the policyholders’ share;

• Scenario 3: if the adjusted amount of a company’s BLAGAB trade profit is equal to or more than the I-E profit for the period, there is no policyholders’ share.