The paper attempts to show how the present basis of assessment to income tax of mutual life assurance companies has developed by modifying the general taxation system of the United Kingdom to fit special features of life assurance.

Section 1 of the paper deals with those aspects of the general tax laws which are relevant to life assurance companies and analyses the position which would arise in the absence of specialised legislation applicable only to life assurance.

Section 2 describes the evolution of specialised provisions affecting the taxation of life assurance and the present position is analysed in Section 3. Section 4 contains some suggestions for future legislation to remove anomalies in the present) basis.