BLAGAB loss relief rule changes bring complexity

Wed 08 Mar 2017

Application of loss relief rules to life companies with Basic Life Assurance and General Annuity Business (“BLAGAB”) trade losses

From 1 April 2017, companies will be restricted in the amount of losses that can be utilised to offset taxable profits to 50% of those profits. The tax regime for life companies is complex and is based on the interaction of the I-E system, BLAGAB trade profits, and Non-BLAGAB trade profits, and the application of the loss restriction to life companies has been the subject to discussion between the industry and HMRC, in particular in relation to brought forward BLAGAB trade losses.

Draft legislation has been published which brings the BLAGAB trade profits and brought forward losses into the new loss restriction regime. However much of the draft legislation is complex and unclear in places.

While it continues to be complex, there has been a large amount of simplification during the past few years and it is to be regretted that a high degree of complexity appears to be brought back to the life tax regime on this particular issue.

For more information contact Stephen Brown (Stephen.J.Brown@mazars.co.uk) Paul Clement (Paul.Clement@mazars.co.uk) or Ian Thomson (Ian.Thomson@mazars.co.uk)

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BLAGAB loss relief rule changes bring complexity

BLAGAB loss relief rule changes bring complexity

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