GIM7000 - Equalisation reserves
This section sets out the tax treatment of ‘equalisation reserves’, which general insurers are required to maintain for certain lines of general (non-life) insurance business for accounting periods ending on or after 23 December 1996. The Financial Services Authority regulatory material on these reserves now generally refers to ‘equalisation provisions’, because they are treated by the FSA as liabilities rather than as reserves, but the tax legislation still refers to ‘equalisation reserves’, and this section of the General Insurance Manual refers to ‘reserves’ rather than ‘provisions’.
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Background |
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Application of the regulatory rules |
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Classes of business affected |
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Classes other than credit business: limits on transfers in and out |
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Classes other than credit business: de minimis limit |
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Classes other than credit business: calculation |
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Classes other than credit business: creation of the reserve |
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Classes other than credit business: ring-fencing |
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Classes other than credit business: ring-fencing: maximum level of reserve |
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Classes other than credit business: summary of requirements |
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Classes other than credit business: example |
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Credit business: limits and calculation |
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Credit business: de minimis limits |
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Annual accounting on an underwriting year basis |
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Cessations and transfers of business |
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Cessations and transfers of business: transfers of a block or all of the business |
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Regulatory return forms |
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The tax rules |
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The tax rules: tax adjustments to premiums or claims |
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The tax rules: errors in returns or accounts |
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The tax rules: differences between accounting periods and financial years |
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The tax rules: funded accounting |
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The tax rules: shadow equalisation reserves |
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The tax rules: shadow equalisation reserves: worked example |
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The tax rules: election not to take a tax deduction |
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The tax rules: parts of reserves built up prior to the tax rules |
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The tax rules: cessations |
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The tax rules: insurers not regulated in the UK: non-statutory reserves |
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The tax rules: insurers not regulated in the UK: non-statutory reserves: tax relief for UK branches of EEA insurers |
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The tax rules: insurers not regulated in the UK: non-statutory reserves: tax relief for UK companies trading outside EEA |
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The tax rules: insurers not regulated in the UK: controlled foreign companies |
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The tax rules: insurers not regulated in the UK: UK branches of non-EEA insurers |
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The tax rules: tax credit relief |
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The tax rules: example of apportionment for double taxation relief |
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The tax rules: anti-avoidance |
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The tax rules: mutuals and partial mutuals |
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The tax rules: group regulatory returns |
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Recalculation of reserves for tax purposes |
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International Accounting Standards (IAS) |
