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The move to the Solvency II regulatory regime (on 1 January 2016) saw the end of the distinction between the shareholders' fund and the long-term fund except in relation to with-profits funds. As the implementation date for Solvency II was postponed, the tax regime pre-empted the regulatory change by introducing the concept of long-term business fixed capital. The policy objective is to effectively remove the investment return from such assets from the measure of I-E profit or non-BLAGAB trade profits as the case may be and tax those returns with relief for any associated expenses on first principles.

An asset forms part of a company's long-term business fixed capital if it is both held for the purposes of the company's long-term business and it is a structural asset of that business¹. The use of the phrase 'structural asset' is a throwback to the pre-2013 regime and specifically includes, but is not limited to, assets that would have met the old definition². It therefore includes, for example, structural subsidiaries that are held outside a with-profits