GIM6310 - Technical provisions: periods of account beginning on or after 1 January 2000: General Insurance Reserves (Tax) Regulations: interest rate

Regulation 3: Rule 9: interest rate

Rule 8 (or if applicable, Rule 8A) gives the result to which an interest calculation is applied to find the additional receipt or expense to be included in taxable profits. This is to restore the Exchequer to the position it would have been in had tax been paid on the basis of discounted best estimates in the earlier period, and to compensate the Exchequer or the taxpayer for the delay in receiving tax or a repayment. Rule 9 defines the interest calculation. The interest rate is the rate charged on late payments of corporation tax. This rate is applied on a compound basis for the first ten years. Thereafter simple interest is charged. The interest period runs from the CT due and payable date for the earlier period until the due and payable date for the later period. The result of the interest calculation is reduced by reference to the corporation tax mainstream rate (apportioned between financial years if the rate changes), so the additional receipt or expense will at current rates be 70% of the interest calculation. This is to reflect the fact that interest paid or received would normally be taken into account as a deduction or as income in the calculation of taxable profits. As it does for discount rates, the Inland Revenue will publish the interest factors relevant for companies with periods of account that end on 31 December.

The interest rate is specified as that used in Regulation 3ZA(1) of the Taxes (Interest Rate) Regulations 1989. This is the average of the rate applied to quarterly instalments under CTSA, calculated from the due and payable date of the earlier period of account to the due and payable date for the later period of account. The due and payable date is taken as the date nine months after the end of each period, as it would be for companies which do not pay corporation tax in quarterly instalments.

The following figures are rounded to the nearest two decimal places. There is no requirement to do this and calculations based on the full number of decimal places should be accepted.

The interest rates for periods of account ending 31 December are: