Life Assurance Companies and Group Relief

Overview

Section 54 Finance Act 2000 amends section 420 Taxes Consolidation Act 1997 to allow life assurance companies to avail of group relief in respect of “new basis business” under the new “gross-roll-up” regime for taxing life assurance companies which is effective from 1 January 2001. The preceding article on Life Assurance Companies explains the term “new basis business” and outlines the new taxation regime in place.

Access to group relief

Section 420 TCA 1997 provides for the allowability of group relief i.e. one member of a group which incurs a trading loss can surrender that loss for set off against profits of another member of the group. Because the profits and losses arising to a life assurance company were, in general, not computed on a normal trading Case 1 basis, but rather on an historic Income less Expenses basis, access to the group relief provisions were denied to such companies.

Under section 53 Finance Act 2000, the new tax regime for life companies effective from 1 January 2001 provides that profits and losses of “new basis business” of such companies will be computed under Case 1. Under section 54 Finance Act 2000, access to group relief is, therefore, allowed in respect of this new basis business.