SolvedLAM09010 | Double Tax Relief: Overview
From HM Revenue & Customs · Life Assurance Manual
Life insurance companies are entitled to relief for foreign tax suffered, subject to the rules in Part 2 of TIOPA10 (see INTM160000). Foreign tax will generally be either:
overseas tax on non-UK income, such as dividends, interest, rent etc., or
tax paid in relation to profits of an overseas branch
This chapter references some of the general rules in Part 2 of TIOPA10 that need particular consideration for life companies as well as variations to those rules specific to insurance companies in TIOPA10/S96 to S104.
The rationale for the differences and the main provisions to consider are:
Relating foreign tax to I-E profit and non-BLAGAB trade profit
Restriction of foreign tax credit is proportionate to split of income on the commercial allocation basis TIOPA10/S97 LAM09200.
Offset of expenses and interest is in line with normal rules but INTM guidance on interest should be read as referring to CTA09/S388, S389 and S391 re BLAGAB assets LAM09210.
CT/Policyholder rate
restriction of relief to the corporation tax rate
impact of policyholder tax rate TIOPA10/S42 and the restriction to the composite rate LAM09100.
Specific rules for CTA09/S35 trade profits computations
These include
general principles and ability to claim foreign tax partly as credit relief and partly as an expense in certan situations LAM09200
relief for companies with overseas branches including those specific to insurance companies LAM09250
pension business and principle of minimisation of foreign tax TIOPA10/S33 LAM09260
dividends are taxable in life insurers’ trade profit calculations and therefore foreign tax credits/relief may be due