TaxPersonal TaxTaxation – Insurers sway Treasury’s mind

Taxation - Insurers sway Treasury's mind

The Treasury is considering giving corporation tax breaks for insurance companies and friendly societies following intensive lobbying by the life assurance industry.

Financial secretary Barbara Roche rejected a Tory bid to amend the Finance Bill to align the tax on insurance funds with the 20% rate of income tax on the majority of savers. She claimed an insurer may already be paying less tax on policyholder gains than the policyholder would have done.

But she promised: ‘We shall examine all the arguments for and against.’

Shadow chief secretary accountant MP David Heathcoat-Amory said the higher corporation tax rate on that part of insurance companies’ gains attributable to policyholders was an anomaly.

Shadow finance minister Nick Gibb said the Association of British Insurers believed the omission of a lower rate was ‘due to an oversight’.

He regretted that Roche had not undertaken to make the change this year.

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