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Finance Bill
Schedule 9 — Qualifying insurance policies
Part 1 — Amendments of Schedule 15 to ICTA etc

205

 

(ii)   

the total amount of the premiums payable under

the policy in any relevant period is or could be

increased,

   

or both;

(c)   

the assignment on or after 6 April 2013 of any rights, or any

5

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

the first time in respect of a new non-resident policy

10

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

could not be a qualifying policy because of

15

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)   

a restricted relief qualifying policy, or

20

(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

earlier policy (and not on its maturity), and

25

(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)   

paragraph 20ZA below applies to a policy and the event is

30

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

applies, or

35

(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

12 months beginning at or after the time of the variation.

40

      (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

mentioned in sub-paragraph (3)(e).

45

      (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”),

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 1 — Amendments of Schedule 15 to ICTA etc

206

 

(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)   

any policy which is a new policy in relation to the

5

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

policy both before and after the variation.

10

     (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.

Restricted relief qualifying policies

A2    (1)  

Sub-paragraph (2) applies if—

15

(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

breach of the premium limit for qualifying policies.

20

      (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

or after 21 March 2012;

25

(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)   

the assignment on or after 6 April 2013 of any rights, or any

30

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)   

the issue of a policy in respect of an insurance made on or

35

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

result of the variation—

40

(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,

45

   

or both;

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 1 — Amendments of Schedule 15 to ICTA etc

207

 

(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

after 21 March 2012 but before 6 April 2013, and

5

(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)   

the policy to which the event relates is a pure protection

10

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

earlier policy (and not on its maturity), and

15

(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)   

paragraph 20ZA below applies to a policy and the event is

20

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

applies, or

25

(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

12 months beginning at or after the time of the variation.

30

      (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

April 2013, in sub-paragraph (6) the reference to 6 July 2013 is to

35

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

policy both before and after the premium limit event or variation.

40

      (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)   

as a result of the variation or exercise of the relevant

45

option—

(i)   

the period over which premiums are payable

under the policy is or could be lengthened, or

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 1 — Amendments of Schedule 15 to ICTA etc

208

 

(ii)   

the total amount of the premiums payable under

the policy in any relevant period is or could be

increased,

   

or both.

     (10)  

A “premium limit event” also occurs in relation to a protected

5

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

option—

10

(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

decreased,

15

   

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)  

The variation of, or exercise of a relevant option under, a protected

20

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)   

the policy is issued and maintained for the sole purpose of

25

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

that sole purpose.

30

     (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

policy is a restricted relief qualifying policy if the earlier policy is

35

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)  

Paragraph A1 above is to be ignored in determining for the

40

purposes of sub-paragraph (14) or (15) if a policy is a qualifying

policy.

           

This is subject to paragraph A1(8).

     (17)  

For further provision about restricted relief qualifying policies, see

sections 463A to 463D of ITTOIA 2005.

45

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 1 — Amendments of Schedule 15 to ICTA etc

209

 

The premium limit for qualifying policies

A3    (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

policies in any relevant period—

5

(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)   

so far as not covered by sub-paragraph (i), the

10

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

is charged on the grounds that an exceptional risk of death

15

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)   

is discharged in accordance with paragraph 15(2)

20

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

3(4)(c),

25

   

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

policy any provision for the waiver of premiums by reason

30

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”)

occurs.

35

      (3)  

The maximum amount that may be left out of account under sub-

paragraph (2)(b) in the case of a relevant policy is—equation: cross[string["\xa3 3,600"],char[N]]

           

where N is the number of complete years for which ran—

(a)   

the other policy involved, or

(b)   

if there is more than one other policy involved, the policy

40

which ran for the most number of complete years.

      (4)  

For the purposes of this paragraph the following are “relevant

policies”—

(a)   

the policy to which the relevant event relates, and

(b)   

any other policy—

45

(i)   

which is a qualifying policy, and

(ii)   

under which the individual is a beneficiary.

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 1 — Amendments of Schedule 15 to ICTA etc

210

 

      (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

occurring at the same time (including where one or more of the

5

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

(4)(a) has effect as if the reference to the policy to which the

10

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)   

all the policies in question are policies issued by the same

15

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

individual in consequence of any of the events, an event relating

20

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.

Protected policies

25

A4    (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

2012, or

30

(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

not on its maturity), and

35

(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)  

A policy issued as mentioned in sub-paragraph (2)(b) is not

40

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.

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 1 — Amendments of Schedule 15 to ICTA etc

211

 

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

A5    (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)  

An individual is a beneficiary under a policy if the individual

5

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)   

any rights under the policy are, or any share in any rights

10

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)  

The following provisions of ITTOIA 2005 apply for the purposes

15

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)   

any rights under the policy are, or any share in any rights

20

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.

Further definitions

25

A6    (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

relation to which paragraph 18 below applies,

30

(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

the amount of the premiums paid except on death

35

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

its terms changed.

40

      (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

reference (wholly or partly) to any rights, or to any share in any

45

 
 

 
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