LAM07200 | Trade profits: BLAGAB trade profits: overview

BLAGAB trade profits are not charged to tax in the usual way but are used to calculate the shareholder share of tax under I-E and to undertake the minimum profits test. The starting point for the BLAGAB trade profit calculation is the trade profit before tax as disclosed by the statutory accounts. As with non-BLAGAB business the BLAGAB share is determined by FA12/CH7 LAM05110.

In general terms the BLAGAB trade profits are calculated in the same way as non-BLAGAB trade profits but there are some important differences as follows:

• the capital allowances rules differ LAM07150

• an adjustment for policyholder tax is made LAM07210

The normal charge to tax on trade profits in CTA09/S35 does not apply to BLAGAB trade profits. BLAGAB is instead charged to tax on the I-E profit. FA12/S68 applies the charge to tax to I-E profits, while FA12/S69 specifically excludes BLAGAB from charge under CTA09/S35.