21 March 2000
OVERSEAS LIFE ASSURANCE BUSINESS
Summary of measures
Changes are to be made to the tax rules that determine what sort of life assurance business sold to non-residents qualifies for favourable tax treatment. These changes will increase the competitiveness of UK companies selling insurance overseas.
1. Overseas life assurance business (“OLAB”) is in general terms business which a company writes with non-resident policyholders. Unlike business with UK resident policy holders, where business qualifies as OLAB no tax is charged on the company in respect of the income and gains building up to meet the benefits payable to policyholders.
2. Representations have been made that the current OLAB rules are too strict and are preventing companies writing business in ordinary commercial situations. Last year the Government laid regulations to relax the compliance requirements of the regime in response to these representations. Now it will relax the legislation as well.
3. The legislation to be included in the Finance Bill provides a power for the Inland Revenue to make regulations setting out what cases are to be excluded from OLAB treatment. The regulations will be the subject of consultation with the industry. The aim will be to have them come into force as soon as possible after Royal Assent, in place of the existing rules which will then be removed.
Regulations amending the compliance rules for overseas life assurance business were described in an Inland Revenue Press Release of 18 October 1999 (Encouraging Overseas Life Assurance Business).
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