UK tax help

Life module — an overview

Overview

This section is designed to analyze the information and functionality of the sheets and sections in the Life module computation.

Completing The Sheets

PERMANENT INFORMATION
The Permanent Information Sheet includes high-level information relating to the company as a whole.
Users can enter standard information such as the registered address, company registration number, and tax reference. You need to enter the applicable accounting standard, as this will determine the layout of the income statement sheets. This sheet transfers the information entered to minimize data entry in the next period.
Business Category Sheets
Before the computation can be completed, the relevant business categories must be inserted. This is done by selecting
Business - BLAGAB/non-BLAGAB
 and/or
Business - LTBFC
 in the Insert Sheets dialog.
When inserting the Business - BLAGAB/non-BLAGAB sheet, you need to select whether the sheet is for BLAGAB or non-BLAGAB. You need to insert the sheet twice if both BLAGAB and non-BLAGAB are relevant. If BLAGAB is selected as the business category, there will be a prompt to insert the separate Adjustment for policyholder tax sheet.
For BLAGAB and non-BLAGAB, the first sheet operates as a calculation of trade profits.
  • Enter any manual adjustments to trade profits that can't be calculated automatically through a separate sheet using the
    Adjustment Details Sheet
    .
  • Use the
    UK Trade Losses Sheet
     to track the movement in the current period and b/f BLAGAB and non-BLAGAB trade losses.
  • The
    Capital Allowance Summary Sheet
     takes the business’ apportionment of overall allowances and charges from the capital allowances sheets (see later).
  • For BLAGAB only, there is also a sheet for current and deferred policyholder tax.
For the LTBFC business, the first sheet operates as a calculation of the LTBFC management expenses, identified using the income statement expense analysis sheets (see later).
  • The
    Management Expenses Sheet
     is used to track the movement in the current period and b/f LTBFC excess management expenses.
  • The
    Capital Allowance Summary Sheet
     takes the business’ apportionment of overall allowances and charges from the capital allowances sheets (see later).
Income Statement
The Income Statement Sheet (and other D sheets) supports layouts under IFRS, both where IFRS 17 is applied and where it is not, and under FRS 101/102.
Enter the applicable accounting standard at the bottom of the
Income Statement Sheet
 or on the
Permanent Information Sheet
.
The income statement per the statutory accounts should be completed manually here; the separate Income Statement - Fund summary sheet lets you reconcile these figures against the income statement figures built up through the individual funds.
Custom line items can be inserted on this sheet, which will transfer automatically to the other income statement sheets.
Income Statement - Fund Analysis
Fund Analysis Sheets for the income statement are transferred individually through the Insert Sheets dialog.
3 types of fund analysis sheet are available and you can insert each one multiple times:
  • Factual basis:
     Figures are entered manually for each business category.
  • Apportionment basis:
     Figures are entered at a fund level and then split across business categories using a percentage apportionment entered at the bottom of the sheet.
  • Profit apportionment basis:
     Figures are entered manually for each business category, but a transfer row adjusts overall profit per business category using a percentage apportionment entered at the bottom of the sheet.
Income Statement - Expense Analysis
Expense analysis is done as an individual fund level.
Most rows in the income statement can be analyzed; move the cursor to the required row, and then select
Expense
 and
income analysis
 from the Analysis Sheets section of the Insert Sheets dialog.
Expense Analysis Sheets are required for the following:
  • Identifying allowable BLAGAB management expenses (as part of the I-E calculation).
  • Identifying allowable LTBFC management expenses.
  • Identifying disallowable expenditure and other tax-sensitive items (fixed asset movements, DAC/DIR, qualifying R&D, etc.)
Income Stream Analysis
The DA Sheets are used to build up income for BLAGAB I-E and LTBFC purposes.
Just like the income statement, the information is built up using individual fund analysis sheets:
  • Factual basis:
     Figures are entered manually for each business category.
  • Apportionment basis:
     Figures are entered at a fund level and then split across business categories using a percentage apportionment entered at the bottom of the sheet.
By default, only the ‘
Income not falling under any other heading
’ and ‘
Non-taxable income
’ sections are displayed. The other sections (loan relationships, U.K. property business, etc.) is viewable by inserting the relevant sheet.
To enable the loan relationships section, insert the Loan relationships and Derivatives Sheet.
An optional sheet is available that allows you to reconcile the total income from the income stream sheets with the total relevant income from the income statement sheets.
Chargeable Gains
The Chargeable Gains Summary Sheet shows a summary of current period BLAGAB gains/losses and non-BLAGAB gains/losses, as well as a reconciliation between the opening and closing b/f BLAGAB and non-BLAGAB capital losses.
Just like the income statement, chargeable gains/losses are built up using individual fund analysis sheets:
The separate Ring-fencing of BLAGAB capital losses sheet shows the calculation of the current period ‘permitted amount’, if relevant.
  • Factual basis:
     Figures are entered manually for each business category.
  • Apportionment basis:
     Figures are entered at a fund level and then split across business categories using a percentage apportionment entered at the bottom of the sheet.
There are also optional sheets available that deal with deemed disposals, the transfer in of deemed disposals and capital losses, and for the tax adjustments required for the disposal of CIS units.
Fixed Assets and Capital Allowances
The
Management Assets Note Sheet
, together with the separate analysis sheets for additions and disposals, should be used to analyze the movement in management assets in the period.
If capital allowances are applicable, insert the
Capital Allowances Sheet
. The allocation of capital allowances between the business categories should be entered on this sheet.
The following capital allowances sheets can then be inserted and completed:
  • Main pool, including full-expensing and super-deduction expenditure.
  • Special rate pool, including special rate FYA and SR allowance expenditure.
  • Short-life assets.
  • Structures and buildings allowance.
  • Other allowances.
  • Transfers in/out.
Calculate capital allowances for a U.K. property business (excluding management assets) by inserting a Capital Allowances - plant in, which lets the properties sheet for each application Income Stream Fund Analysis Sheet.
Iterative Calculations
Life tax computations are subject to a number of iterative calculations arising from circularities within the computation.
For example, the BLAGAB trade profit calculation affects the policyholders’ share of BLAGAB I-E and the tax on that share; however, the policyholder tax is itself an allowable deduction in the calculation of BLAGAB trade profits.
We've developed a new
Iterative Calculations Sheet
, which allows the user to see how the tax position evolves and converges through the iterative calculations. The sheet then ‘populates’ the necessary figures elsewhere in the computation to avoid creating circular errors.
An error will appear at the bottom of the sheet if it needs running. To do so, select the lightning bolt symbol.
Foreign Income and Double Tax Relief
Where a company has suffered foreign tax on foreign income, the double tax relief (DTR) available is calculated by a number of separate sheets. Inserting Foreign Income will insert the following 2 sheets:
  • Foreign trading income
    , which deals with foreign tax suffered on foreign trading income. The sheets will calculate the amount of credit relief available, and the amount of foreign tax that can be deducted in the BLAGAB and non-BLAGAB trade profit calculations.
  • Foreign non-trading income
    , which deals with all other BLAGAB and LTBFC foreign income. These sheets will calculate the amount of credit relief available, and the amount of foreign tax that can be deducted in the BLAGAB I-E and LTBFC income calculations.
The foreign trading income calculations are built up using fund analysis sheets. In these fund analysis sheets, you must show each income of foreign income, together with the foreign tax suffered.
BLAGAB I-E
The BLAGAB I-E calculation gets split into a number of different sheets. The main ones are as follows:
  • The BLAGAB I-E computation summarizes the legislative steps in the calculation of the I-E profit.
  • The Policyholders and shareholders analysis sheet shows the split of I-E profit into policyholders’ share and shareholders’ share.
  • The BLAGAB management expenses sheet shows the legislative steps involved in the calculation of adjusted BLAGAB management expenses. Separate BLAGAB acquisition expenses sheets calculate the amount of allowable acquisition expenses in the current period.
  • The BLAGAB non-trading losses sheet shows the reconciliation between opening and closing BLAGAB losses (excluding BLAGAB trade losses, shown on the Loss summary).
Other Sheets to Note
The Life module contains a number of summary sheets that are also present in the main CT module and that operate in the same way.
For example, within the A sheets this includes the Profits and gains computation, Tax calculation, Carried forward losses, and the Loss summary.
The spreading of
IFRS 17 Transitional Amounts Sheet
 is required if IFRS 17 is applied. The separate IFRS 17 transitional amounts sheet is only required in the first period in which IFRS 17 applies.
Insert the tax payments and interest sheet to enter details of tax payments and calculate any interest payable or receivable.
CT600 and Supplementary Returns
The Life module supports the following returns:
  • CT600
  • CT600B – CFCs, hybrid and other mismatches
  • CT600C – Group relief
  • CT600J – Disclosure of tax avoidance schemes
  • CT600L – Research and Development
  • CT600N – Residential Property Developer Tax

This article applies to:

  • Product: ONESOURCE Corporate Tax