Tax Implications for with-profits fund in run-off

Discussion in 'SA2' started by Retrieva, Nov 26, 2020.

  1. Retrieva

    Retrieva Active Member

    If a with-profits fund becomes XSE in run-off, can it remain XSE and not pay BLAGAB tax for the rest of the fund's existence? I ask because for other situations where an insurer can take account of losses for tax relief, the company may need to carry out a profit projection to show that the company will return to profitability (eg when determining deferred tax assets - chapter 8 of SA2). For a run-off fund, the expectation would be that it would not return to XSI.
     
  2. Em Francis

    Em Francis ActEd Tutor Staff Member

    Possibly but remember that there will no longer be acquisition costs to spread. Also, this doesn't mean that they won't be paying tax as they will still have to pay the tax on the profit arising from the minimum profits test.
     
    Retrieva likes this.
  3. Retrieva

    Retrieva Active Member

    Thank you! That's a good point. The company will continue to pay tax on the minimum profit.
     

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