(ii) the total amount of the premiums payable under
the policy in any relevant period is or could be
increased,

or both;

(c) 5the assignment on or after 6 April 2013 of any rights, or any
share in any rights, under a policy where the assignment
falls within paragraph B2(3)(c) to (g) below;

(d) a deceased beneficiary event on or after 6 April 2013;

(e) the conditions in paragraph 24(3) below being fulfilled for
10the first time in respect of a new non-resident policy
where—

(i) the conditions are fulfilled for the first time on or
after 6 April 2013, and

(ii) but for the conditions being fulfilled, the policy
15could not be a qualifying policy because of
paragraph 24(2).

(4) An event does not fall within sub-paragraph (3) if—

(a) the policy to which the event relates is—

(i) a protected policy,

(ii) 20a restricted relief qualifying policy, or

(iii) a pure protection policy,

(b) the event is the issue of a policy which is a new policy in
relation to an earlier policy where—

(i) the new policy is issued in substitution for the
25earlier policy (and not on its maturity), and

(ii) the life assured under the new policy is different to
the life assured under the earlier policy but that is
the only difference to what the position would
have been had the earlier policy continued to run,

(c) 30paragraph 20ZA below applies to a policy and the event is
the reinstatement or replacement of the policy as
mentioned in paragraph 20ZA(4),

(d) the event is the issue or variation of a policy in relation to
which paragraph 29 of Schedule 39 to the Finance Act 2012
35applies, or

(e) the event is an assignment falling within paragraph
B2(3)(e) below where the assignment is a mortgage
endowment assignment.

(5) In sub-paragraph (3)(b)(ii) “relevant period” means any period of
4012 months beginning at or after the time of the variation.

(6) A variation is to be ignored for the purposes of sub-paragraph
(3)(b) if its effect is nullified before the end of the period of 3
months after the day on which the variation occurs.

(7) Sub-paragraph (4)(a)(i) does not apply in the case of an event
45mentioned in sub-paragraph (3)(e).

(8) Sub-paragraph (4)(a)(ii) does not apply in the case of—

(a) an event mentioned in sub-paragraph (3)(c) or (d)
occurring in relation to a restricted relief qualifying policy
(“the assigned policy”),

(b) any subsequent event relating to the assigned policy, or

(c) any event relating to—

(i) a later policy which is a new policy in relation to
the assigned policy, or

(ii) 5any policy which is a new policy in relation to the
later policy,

and so on.

(9) In the case of an event mentioned in sub-paragraph (3)(b), sub-
paragraph (4)(a)(iii) applies only if the policy is a pure protection
10policy both before and after the variation.

(10) This paragraph is to be applied after all other provisions of this
Schedule relevant to the question of whether a policy is a
qualifying policy after an event have been applied.

A2 Restricted relief qualifying policies

(1) 15Sub-paragraph (2) applies if—

(a) an event falling within sub-paragraph (3) occurs,

(b) the policy to which the event relates is a qualifying policy
after the event, and

(c) an individual who is a beneficiary under that policy is in
20breach of the premium limit for qualifying policies.

(2) That policy is to be a restricted relief qualifying policy after the
event.

(3) The events falling within this sub-paragraph are—

(a) a premium limit event in relation to a protected policy on
25or after 21 March 2012;

(b) the issue of a policy as mentioned in paragraph A4(2)(b)
below if, assuming that the substitution of the protected
policy were instead a variation of that policy, there would
be a premium limit event in relation to that policy;

(c) 30the assignment on or after 6 April 2013 of any rights, or any
share in any rights, under a protected policy where the
assignment falls within paragraph B2(3)(c) to (g) below;

(d) a deceased beneficiary event on or after 6 April 2013 where
the policy in question is a protected policy;

(e) 35the issue of a policy in respect of an insurance made on or
after 21 March 2012 but before 6 April 2013 otherwise than
as mentioned in paragraph A4(2)(b) below;

(f) the variation of a policy, other than a protected policy, on
or after 21 March 2012 but before 6 April 2013 where as a
40result of the variation—

(i) the period over which premiums are payable
under the policy is or could be lengthened, or

(ii) the total amount of the premiums payable under
the policy in any relevant period is or could be
45increased,

or both;

(g) the conditions in either sub-paragraph (3) or sub-
paragraph (4) of paragraph 24 below being fulfilled for the
first time in respect of a new non-resident policy where—

(i) the conditions are fulfilled for the first time on or
5after 21 March 2012 but before 6 April 2013, and

(ii) but for the conditions being fulfilled, the policy
could not be a qualifying policy because of sub-
paragraph (2) of paragraph 24.

(4) An event does not fall within sub-paragraph (3) if—

(a) 10the policy to which the event relates is a pure protection
policy,

(b) the event is the issue of a policy which is a new policy in
relation to an earlier policy where—

(i) the new policy is issued in substitution for the
15earlier policy (and not on its maturity), and

(ii) the life assured under the new policy is different to
the life assured under the earlier policy but that is
the only difference to what the position would
have been had the earlier policy continued to run,

(c) 20paragraph 20ZA below applies to a policy and the event is
the reinstatement or replacement of the policy as
mentioned in paragraph 20ZA(4),

(d) the event is the issue or variation of a policy in relation to
which paragraph 29 of Schedule 39 to the Finance Act 2012
25applies, or

(e) the event is an assignment falling within paragraph
B2(3)(e) below where the assignment is a mortgage
endowment assignment.

(5) In sub-paragraph (3)(f)(ii) “relevant period” means any period of
3012 months beginning at or after the time of the variation.

(6) A premium limit event or a variation is to be ignored for the
purposes of sub-paragraph (3)(a) or (f) if its effect is nullified
before 6 July 2013.

(7) In the case of a premium limit event which occurs on or after 6
35April 2013, in sub-paragraph (6) the reference to 6 July 2013 is to
be read as a reference to the end of the period of 3 months after the
day on which the premium limit event occurs.

(8) In the case of an event mentioned in sub-paragraph (3)(a) or (f),
sub-paragraph (4)(a) applies only if the policy is a pure protection
40policy both before and after the premium limit event or variation.

(9) A “premium limit event” occurs in relation to a protected policy
if—

(a) the policy is varied or a relevant option is exercised so as to
change the terms of the policy, and

(b) 45as a result of the variation or exercise of the relevant
option—

(i) the period over which premiums are payable
under the policy is or could be lengthened, or

(ii) the total amount of the premiums payable under
the policy in any relevant period is or could be
increased,

or both.

(10) 5A “premium limit event” also occurs in relation to a protected
policy if on or after 6 April 2013—

(a) the policy is varied or a relevant option is exercised so as to
change the terms of the policy, and

(b) as a result of the variation or exercise of the relevant
10option—

(i) the period over which premiums are payable
under the policy is or could be shortened, or

(ii) the total amount of the premiums payable under
the policy in any relevant period is or could be
15decreased,

or both.

(11) In sub-paragraphs (9)(b)(ii) and (10)(b)(ii) “relevant period”
means any period of 12 months beginning at or after the time of
the variation or exercise of the relevant option.

(12) 20The variation of, or exercise of a relevant option under, a protected
policy is not a premium limit event in relation to the policy if—

(a) the policy secures a capital sum payable either—

(i) on survival for a specified term, or

(ii) on earlier death or on earlier death or disability,

(b) 25the policy is issued and maintained for the sole purpose of
ensuring that the borrower under an interest-only
mortgage will have sufficient funds to repay the principal
lent under the mortgage, and

(c) the policy is varied, or the relevant option is exercised, for
30that sole purpose.

(13) In sub-paragraph (3)(g) references to paragraph 24 below are to
that paragraph as it has effect before the appointed date for the
purposes of section 55 of the Finance Act 1995.

(14) A qualifying policy which is a new policy in relation to an earlier
35policy is a restricted relief qualifying policy if the earlier policy is
a restricted relief qualifying policy.

(15) A policy which is a restricted relief qualifying policy remains a
restricted relief qualifying policy so long as it is a qualifying
policy.

(16) 40Paragraph A1 above is to be ignored in determining for the
purposes of sub-paragraph (14) or (15) if a policy is a qualifying
policy.

(17) For further provision about restricted relief qualifying policies, see
sections 463A to 463D of ITTOIA 2005.

A3 The premium limit for qualifying policies

(1) For the purposes of paragraphs A1(1)(c) and A2(1)(c) above an
individual is in breach of the premium limit for qualifying policies
if the total amount of the premiums payable under relevant
5policies in any relevant period—

(a) exceeds £3,600, or

(b) could exceed £3,600 as a result of—

(i) the exercise of any one or more relevant options
conferred by one or more relevant policies, or

(ii) 10so far as not covered by sub-paragraph (i), the
application of one or more terms of one or more
relevant policies relating to increases in premiums.

(2) For the purposes of sub-paragraph (1)—

(a) so much of a premium payable under a relevant policy as
15is charged on the grounds that an exceptional risk of death
or disability is involved is to be left out of account in
determining the premiums payable under the policy,

(b) so much of the first premium payable under a relevant
policy the liability for the payment of which—

(i) 20is discharged in accordance with paragraph 15(2)
below, or

(ii) in the case of a policy in relation to which
paragraph 3 below applies, is discharged under a
provision of the policy falling within paragraph
253(4)(c),

is to be left out of account in determining the premiums
payable under the policy (subject to sub-paragraph (3)
below),

(c) in determining the premiums payable under a relevant
30policy any provision for the waiver of premiums by reason
of a person’s disability is to be ignored, and

(d) “relevant period” means any period of 12 months
beginning at or after the time when the event falling within
paragraph A1(3) or A2(3) above (“the relevant event”)
35occurs.

(3) The maximum amount that may be left out of account under sub-
paragraph (2)(b) in the case of a relevant policy is—

(a) 40the other policy involved, or

(b) if there is more than one other policy involved, the policy
which ran for the most number of complete years.

(4) For the purposes of this paragraph the following are “relevant
policies”—

(a) 45the policy to which the relevant event relates, and

(b) any other policy—

(i) which is a qualifying policy, and

(ii) under which the individual is a beneficiary.

(5) But neither a protected policy nor a pure protection policy is to be
a relevant policy by virtue of sub-paragraph (4)(b).

(6) Sub-paragraph (7) applies if this paragraph is to be applied in the
case of an individual in consequence of two or more events
5occurring at the same time (including where one or more of the
events falls within paragraph A1(3) above and one or more of the
events falls within paragraph A2(3) above).

(7) For the purpose of applying this paragraph in the case of the
individual in consequence of any of the events, sub-paragraph
10(4)(a) has effect as if the reference to the policy to which the
relevant event relates were a reference to all the policies to which
the events, taken together, relate.

(8) But sub-paragraph (7) does not apply, and sub-paragraph (9)
applies instead, if—

(a) 15all the policies in question are policies issued by the same
issuer, and

(b) each of them has an unique identifier in a series of unique
identifiers which the issuer gives to policies issued by it.

(9) For the purpose of applying this paragraph in the case of the
20individual in consequence of any of the events, an event relating
to a policy (“policy A”) is treated as occurring before an event
relating to another policy (“policy B”) if, in the issuer’s series of
unique identifiers, policy A’s unique identifier comes before
policy B’s unique identifier.

A4 25Protected policies

(1) This paragraph applies for the purposes of this Part of this
Schedule.

(2) A policy is “protected” if—

(a) it is issued in respect of an insurance made before 21 March
302012, or

(b) it is issued in respect of an insurance made on or after 21
March 2012 where—

(i) it is a new policy in relation to an earlier policy,

(ii) it is issued in substitution for the earlier policy (and
35not on its maturity), and

(iii) the earlier policy is a protected policy (whether by
virtue of paragraph (a) or this paragraph).

(3) A policy which is protected ceases to be protected if it becomes a
restricted relief qualifying policy.

(4) 40A policy issued as mentioned in sub-paragraph (2)(b) is not
protected if—

(a) its issue is an event falling within paragraph A2(3) above,
and

(b) after that event it is a restricted relief qualifying policy.

A5 How to determine if an individual is a beneficiary under a policy

(1) This paragraph applies for the purposes of this Part of this
Schedule in determining if an individual is a beneficiary under a
policy.

(2) 5An individual is a beneficiary under a policy if the individual
beneficially owns—

(a) any rights under the policy, or

(b) any share in any rights under the policy.

(3) An individual is a beneficiary under a policy if—

(a) 10any rights under the policy are, or any share in any rights
under the policy is, held on non-charitable trusts created
by the individual, and

(b) those rights are, or that share is, not beneficially owned by
any individual.

(4) 15The following provisions of ITTOIA 2005 apply for the purposes
of sub-paragraph (3)(a)—

(a) section 465(6), and

(b) the definition of “non-charitable trust” in section 545(1).

(5) An individual is a beneficiary under a policy if—

(a) 20any rights under the policy are, or any share in any rights
under the policy is, held as security for a debt of the
individual, and

(b) those rights are, or that share is, not beneficially owned by
any individual.

A6 25Further definitions

(1) In this Part of this Schedule—

(a) “new policy” has the meaning given in paragraph 17
below,

(b) references to the variation of a policy are to a variation in
30relation to which paragraph 18 below applies,

(c) “pure protection policy” means a policy—

(i) which has no surrender value and is not capable of
acquiring a surrender value, or

(ii) under which the benefits payable cannot exceed
35the amount of the premiums paid except on death
or in respect of disability, and

(d) “relevant option”, in relation to a policy, means an option
conferred by the policy on the person to whom it is issued
to have another policy substituted for it or to have any of
40its terms changed.

(2) For the purposes of this Part of this Schedule a “deceased
beneficiary event” occurs if, in connection with the death of an
individual (“D”) who was a beneficiary under a policy, an
individual (“B”) becomes a beneficiary under that policy by
45reference (wholly or partly) to any rights, or to any share in any

rights, by reference to which D was a beneficiary (wholly or
partly).

(3) For the purposes of this Part of this Schedule an assignment is a
“mortgage endowment assignment” if—

(a) 5the policy to which the assignment relates secures a capital
sum payable either—

(i) on survival for a specified term, or

(ii) on earlier death or on earlier death or disability,

(b) the policy is issued and maintained for the sole purpose of
10ensuring that the borrower under an interest-only
mortgage will have sufficient funds to repay the principal
lent under the mortgage, and

(c) when the assignment occurs, it is intended that the policy
will continue to be maintained for that sole purpose.”

3 15At the beginning of Part 1 (qualifying conditions) insert—

“RULES FOR QUALIFYING POLICIES

Rights to be beneficially owned by individuals only

B1 (1) Sub-paragraph (2) applies in relation to a policy issued in respect
of an insurance made on or after 6 April 2013.

(2) 20In order for the policy to be a qualifying policy, when it is issued
all the rights under it must be beneficially owned by (and only
by)—

(a) one individual, or

(b) two or more individuals taken together.

25(This is the case notwithstanding any other provision of this
Schedule.)

(3) Sub-paragraph (2) does not apply if the policy is protected.

(4) A policy is “protected” if it is a new policy (as defined in
paragraph 17 below) in relation to—

(a) 30a policy issued in respect of an insurance made before 21
March 2012, or

(b) a policy which is protected (whether by virtue of
paragraph (a) or this paragraph).

Assignments

B2 (1) 35Sub-paragraph (2) applies if any rights under a qualifying policy
are, or any share in any rights under a qualifying policy is,
assigned on or after 6 April 2013.

(2) The policy is not to be a qualifying policy after the assignment
(notwithstanding any other provision of this Schedule).

(3) 40Sub-paragraph (2) does not apply if—

(a) the assignment is from an individual by way of security for
a debt of the individual,

(b) the assignment is to an individual on the discharge of a
debt of the individual secured by the rights or share,

(c) 5the assignment is from an individual to the individual’s
spouse or civil partner,

(d) the assignment is to an individual in pursuance of an order
made by a court,

(e) the assignment is to an individual in pursuance of a legally
10enforceable obligation relating to a divorce or the
dissolution of a civil partnership,

(f) the assignment is from an individual and, as a result of the
assignment, the rights assigned are, or the share assigned
is, held on trusts created by the individual,

(g) 15the assignment is to an individual and, as a result of the
assignment, the rights assigned are, or the share assigned
is, no longer held on trusts, or

(h) the assignment—

(i) is to the personal representatives of a deceased
20individual, or

(ii) is to an individual where, as a result of the
assignment, a deceased beneficiary event (see
paragraph A6(2) above) occurs.

(4) Section 465(6) of ITTOIA 2005 applies for the purposes of sub-
25paragraph (3)(f).

(5) See paragraphs A1 and A2 above which may apply in
consequence of an assignment falling within sub-paragraph (3).

Required statements

B3 (1) Sub-paragraph (2) applies if any of the following events occurs—

(a) 30the issue of a policy in respect of an insurance made on or
after 6 April 2013;

(b) the variation of a policy on or after 6 April 2013 where
paragraph 18 below applies in relation to the variation and
as a result of the variation—

(i) 35the period over which premiums are payable
under the policy is or could be lengthened, or

(ii) the total amount of the premiums payable under
the policy in any relevant period is or could be
increased,

40or both;

(c) a premium limit event in relation to a protected policy on
or after 6 April 2013 (see paragraph A2(9) to (12) above);

(d) an event on or after 6 April 2013 which would be a
premium limit event in relation to a protected policy but
45for paragraph A2(12) above;

(e) the assignment on or after 6 April 2013 of any rights, or any
share in any rights, under a policy where the assignment
falls within paragraph B2(3)(c) to (g) above;

(f) a deceased beneficiary event (see paragraph A6(2) above)
on or after 6 April 2013;

(g) the conditions in paragraph 24(3) below being fulfilled for
the first time in respect of a new non-resident policy
5where—

(i) the conditions are fulfilled for the first time on or
after 6 April 2013, and

(ii) but for the conditions being fulfilled, the policy
could not be a qualifying policy because of
10paragraph 24(2).

(2) Each individual who is a beneficiary under the policy must, before
the end of the statement period, make to the issuer of the policy a
statement dealing with the prescribed matters.

(3) If an individual does not comply with sub-paragraph (2) the
15policy is not to be a qualifying policy after the event
(notwithstanding any other provision of this Schedule).

(4) In sub-paragraph (1)(b)(ii) “relevant period” means any period of
12 months beginning at or after the time of the variation.

(5) Sub-paragraph (2)—

(a) 20does not apply in the case of an event mentioned in sub-
paragraph (1)(a), (e), (f) or (g) if the policy is a pure
protection policy, and

(b) does not apply in the case of an event mentioned in sub-
paragraph (1)(b), (c) or (d) if the policy is a pure protection
25policy both before and after the event.

“Pure protection policy” has the meaning given by paragraph
A6(1)(c) above.

(6) Sub-paragraph (2) does not apply in the case of an event
mentioned in sub-paragraph (1)(e) where the assignment falls
30within paragraph B2(3)(e) above and is a mortgage endowment
assignment.

(7) In sub-paragraph (2)—

(a) the reference to an individual who is a beneficiary under
the policy is to be read in accordance with paragraph A5
35above,

(b) “the statement period” means—

(i) the period of 3 months after the day on which the
event occurs, or

(ii) if the event occurs before the day on which the
40Finance Act 2013 is passed, the period of 3 months
after that day,

or such longer period as an officer of Revenue and
Customs may allow, and

(c) “prescribed” means prescribed by regulations made by the
45Commissioners for Her Majesty’s Revenue and Customs.