Schedule 14
Finance Bill
12:15 pm
Kitty Ussher (Economic Secretary, HM Treasury; Burnley, Labour)
Clause 33 and schedule 13, which we have just agreed, are simplification measures, when combined with schedule 14, which is before us. They are about profits on life insurance policies owned by companies. Together they turn some 60 pages of legislation into three, including some of the transitional provisions, leading to far lower compliance costs for industry. I trust that that too will be welcomed by the Opposition.
Government amendments Nos. 98 to 104 show that we can take the simplification in schedule 14 slightly further by also repealing some rules that apply to a purchased life annuity owned by a company. The rules set out how to calculate the non-exempt part of the annuity, which is the taxable income part. Amendment No. 99 repeals the relevant legislation on the special tax rules, which are no longer needed to identify separately a taxable part of the annuity. Amendment No. 98 ensures that, following the repeals, the tax treatment of an insurance company’s profits from its purchased life annuity business remains the same. An insurance company must continue to calculate a non-exempt amount for the purpose of its tax computations, where the annuity is owned by a company, in the same way as it does now. To do so, it must apply the rules that apply to purchased life annuities held by individuals; those rules continue in force. Amendments Nos. 100 to 104 repeal a number of provisions that are no longer needed or that inserted amendments into legislation that is being repealed.
I regret that we were not able to introduce the amendments with the original published Bill, but only once the possibility of simplifying further came to our attention. I hope that all sides of the Committee will agree that introducing the amendments is the right thing to do.