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Amendment of Chapter 1 (general provisions) of Part 26 of Principal Act.
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81.—(1) The Principal Act is amended in Chapter 1 of Part 26—
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(a) by the substitution in section 711 for subsection (1) of the following:
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“(1) For the purposes of computing corporation tax on chargeable gains accruing to a fund or funds maintained by an assurance company in respect of its life business—
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(a) (i) section 556, and
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(ii) section 607,
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shall not apply,
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(b) section 581 shall, as respects—
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(i) subsections (1) and (2) of that section, and
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(ii) subsection (3) of that section, in so far as a chargeable gain is not thereby disregarded for the purposes of that subsection,
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apply as if paragraph 24 of Schedule 32, section 719, section 723(7)(a) and paragraph (a)(ii) had not been enacted,
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(c) the amount of capital gains tax computed for the purposes of section 78(2), otherwise than in respect of the special investment fund, is the amount so computed as if, notwithstanding section 28(3), the rate of capital gains tax were—
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(i) throughout the financial year 1999, subject to paragraph (d), 40 per cent, and
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(ii) throughout each subsequent financial year, the rate of corporation tax specified in section 21(1) for that financial year,
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and
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(d) where for an accounting period the expenses of management (within the meaning of section 83 as applied by section 707), deductible exceeds the amount of profits from which they are deductible, the reference in paragraph (c)(i) to 40 per cent shall be a reference to the rate of corporation tax referred to in section 21(1) for the financial year 1999.”,
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and
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(b) in section 713—
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(i) by the deletion of subsection (2),
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(ii) by the substitution for subsection (3) of the following:
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“(3) Notwithstanding sections 21(1) and 21A and subject to subsection (6)(b), corporation tax shall be charged in respect of the part specified in subsection (6)(a) of unrelieved profits of an accounting period of an assurance company from investments referable to life business, other than special investment business, at the rate determined by the formula—
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(N2 x SR1) + (N3 x SR2)
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_____________________
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N1
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where—
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N1 is the number of months in the accounting period,
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N2 is the number of months from the day of the commencement of the accounting period to the earlier of—
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(a) the end of the year of assessment (in this subsection referred to as the ‘first year of assessment’) in which that day falls, and
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(b) the end of the accounting period,
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N3 is N1 reduced by N2,
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SR1 is the standard rate for the first year of assessment, and
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SR2 is the standard rate for the year of assessment immediately subsequent to the first year of assessment.”,
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and
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(iii) by the deletion of subsection (4).
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(2) Subsection (1)—
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(a) as respects paragraph (a), is deemed to apply for the financial year 1999 and subsequent financial years, and
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(b) as respects paragraph (b), is deemed to have effect for the financial year 2000 and subsequent financial years.
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