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EY 2: Policyholder base
or “Income and deductions for life insurers related to policyholders”
You could also call this:

“Explains how life insurers calculate income and deductions for their shareholder base”

If you’re a life insurer, you have different types of income and deductions for your shareholder base. For policies that aren’t profit participation policies, you get income under section EY 19. You also get income for services you provide to policyholders for managing funds for future claims under savings product policies that aren’t profit participation policies. This is covered in section EY 19B.

For profit participation policies, your income comes from sections EY 21, EY 28, and EY 29. If you deal with annuities, you get income under section EY 31.

You can also have deductions for your shareholder base. For policies that aren’t profit participation policies, you can deduct amounts under section EY 20. For profit participation policies, you can make deductions under sections EY 22 and EY 28. There are also deductions for certain periods and policies described in section EY 30, and for annuities under section EY 31.

You need to calculate reserving amounts for life insurance policies that have a life risk component and aren’t profit participation policies. This is done using sections EY 23 to EY 27. These reserving amounts might be added to your income or allowed as a deduction, depending on what the sections say.

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Next up: EY 4: Apportionment of income of particular source or nature, and of tax credits

or “Splitting income and tax credits between policyholder and shareholder bases for insurance policies”
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Part E Timing and quantifying rules
Life insurance rules

EY 3Shareholder base

  1. A life insurer has shareholder base income,—

  2. for policies that are not profit participation policies, under section EY 19: see also subsection (3), for reserves:
    1. for consideration for services provided to policyholders by the life insurer in administering and managing funds intended for use in meeting future policyholder claims under savings product policies that are not profit participation policies, under section EY 19B:
      1. for profit participation policies, under sections EY 21, EY 28, and EY 29:
        1. for annuities, under section EY 31.

          1. A life insurer has shareholder base allowable deductions,—

          2. for policies that are not profit participation policies, under section EY 20: see also subsection (3), for reserves:
            1. for profit participation policies, under sections EY 22 and EY 28:
              1. for the period and policies described in section EY 30, under that section:
                1. for annuities, under section EY 31.

                  1. Under sections EY 23 to EY 27, a life insurer calculates reserving amounts for life insurance policies, other than annuities, that have a life risk component and are not profit participation policies. A reserving amount may be income included in their shareholder base income, or a deduction that is included in their shareholder base allowable deduction, as provided by the relevant sections.

                  Notes
                  • Section EY 3: substituted, on , by section 185(1) of the Taxation (International Taxation, Life Insurance, and Remedial Matters) Act 2009 (2009 No 34).
                  • Section EY 3(1)(ab): inserted (with effect on 1 April 2015), on , by section 81(1) (and see section 81(3) and (4)) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).
                  • Section EY 3 list of defined terms savings product policy: inserted (with effect on 1 April 2015), on , by section 81(2) of the Taxation (Annual Rates for 2016–17, Closely Held Companies, and Remedial Matters) Act 2017 (2017 No 14).