The loan relationship legislation was originally introduced in the Finance Act 1996. The Finance Act 2008 extended the loan relationship rules to include life assurance policies.
The loan relationship legislation was originally introduced in the Finance Act 1996. The Finance Act 2008 extended the loan relationship rules to include life assurance policies.
The loan relationship legislation was originally introduced in the Finance Act 1996. The Finance Act 2008 extended the loan relationship rules to include life assurance policies. Capital redemption policies, debt instruments and collective investments (where the underlying investment was more than 60% invested in debtbased stock-cash deposit, fixed interest or Government stock for instance) were already subject to these rules.
Many companies simply hold cash on bank or building society deposits if they have no immediate plans for it, and substantial sums may build up over a number of years.
There are two principal practices used by UK companies.
Under this method, any increase in the investment over the accounting period will be taxed as a non-trading credit. Corporation tax will be due if there is a gain over the period, regardless of whether the policy was surrendered in full or in part during the tax period.
Under this accounting method, corporation tax is only levied on a company when part or all of the policy is realised, such as when a full or part surrender is made. They should be declared in the accounting period they are made. If the resulting surrender has resulted in a loss, this can be offset against any other non-trading credits.
The value of investments and the income they produce can fall as well as rise, you may get back less than you invested.
Tax treatment varies according to individual circumstance and is subject to change.
