In a mixed bag of life tax measures announced just before Christmas, the Inland Revenue set out proposals to reform:
- treatment of capital losses (the provisions in question being apparently designed mainly to prevent ‘bed and breakfasting’, by ‘box transfers’ and other means, and to restrict use of ‘I – E’ capital losses against shareholder gains)
- treatment of Case VI losses from gross roll-up categories of business such as pension, overseas life assurance business, and ISA business on a transfer of insurance business
- restatement of the scope of Case I receipts
The stated aim is to improve the effectiveness and fairness of the tax rules for life companies. Draft legislation has been promised but has not yet appeared. The capital gains proposals, if enacted, will apply to gains accruing and deemed disposals on or after 23 December 2002. The other proposals, if enacted, will apply to periods of account beginning on or after 1 January 2003.
