On Feb. 26, UK HMRC updated on CoACS changes for life insurers.
UK HMRC issued tax information note making changes to existing tax rules for life insurance firms investing in co-ownership authorized contractual scheme (CoACS).
Follows UK HMRC Apr. 2024 proposed rules for reserved investor fund, see #207060.
Overview
Measure makes sure that a life insurance company is in a similar tax position regarding the treatment of capital allowances for capital gains calculations whether they invest in a co-ownership authorized contractual scheme or the underlying assets directly.
The changes are being introduced together with rules for a new type of investment fund, the Reserved Investor Fund, on which a note was issued in Mar. 2024.
Measure makes changes to the existing tax rules for the treatment of capital allowances within annual deemed disposal rules for life insurers investing in a CoACS.
Addresses anomalies that can arise on computing a gain or loss on a deemed disposal of units in a CoACS, concerns restriction of a loss where capital allowances have been claimed, and how structures and buildings allowances are clawed back.
Under the rules currently in place there is no effective relief for structures and buildings allowances for a life insurance company investor in a CoACS.
Effectiveness
Measure will take effect for accounting periods commencing on/after Mar. 19, 2025.
