Andrew Griffith – 2022 Statement on Life Insurance Taxation

The statement made by Andrew Griffith, the Economic Secretary to the Treasury, in the House of Commons on 15 December 2022.

The Government are announcing the following measure— of which there are two components—which will take immediate effect from today.

The first part of the measure applies to re-insurers of a specific type of long-term insurance business known as basic life assurance and general annuity business (BLAGAB). It addresses a possible tax mismatch in the life insurance rules where re-insurance precedes a transfer of BLAGAB. In this situation the measure eliminates the possibility of a mismatch by classifying the re-insured business as BLAGAB in the hands of the re-insurer. This will protect Exchequer revenues needed to fund vital public services.

The second part of the measure addresses an industry concern that the current scope of section 92 of the Finance Act 2012 may be unnecessarily wide and is blocking commercial transactions. It amends that section so that it does not apply where substantially all the insurance risks of a book of BLAGAB are assumed by a re-insurer.

The draft legislation will be published today on gov.uk: https://www.gov.uk/government/publications/re-insurance-in-the-course-of-transfers-of-long-term-business. It will be accompanied by a tax information and impact note and an explanatory note. A copy of the legislation will also be deposited in the Libraries of both Houses.