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

212

 

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

partly).

           

For this purpose, it does not matter if B is already a beneficiary

under the policy.

      (3)  

For the purposes of this Part of this Schedule an assignment is a

5

“mortgage endowment assignment” if—

(a)   

the 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,

10

(b)   

the 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)   

when the assignment occurs, it is intended that the policy

15

will continue to be maintained for that sole purpose.”

3          

At 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

20

of an insurance made on or after 6 April 2013.

      (2)  

In 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

25

(b)   

two or more individuals taken together.

           

(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

30

paragraph 17 below) in relation to—

(a)   

a 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).

35

Assignments

B2    (1)  

Sub-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

40

(notwithstanding any other provision of this Schedule).

      (3)  

Sub-paragraph (2) does not apply if—

 
 

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

213

 

(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)   

the assignment is from an individual to the individual’s

5

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

enforceable obligation relating to a divorce or the

10

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)   

the assignment is to an individual and, as a result of the

15

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

individual, or

20

(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-

paragraph (3)(f).

25

      (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)   

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

30

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)   

the period over which premiums are payable

35

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;

40

(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

for paragraph A2(12) above;

45

(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;

 
 

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

214

 

(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

where—

5

(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

paragraph 24(2).

10

      (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

policy is not to be a qualifying policy after the event

15

(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)   

does not apply in the case of an event mentioned in sub-

20

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

policy both before and after the event.

25

           

“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

within paragraph B2(3)(e) above and is a mortgage endowment

30

assignment.

           

“Mortgage endowment assignment” is to be read in accordance

with paragraph A6(3) above.

      (7)  

In sub-paragraph (2)—

(a)   

the reference to an individual who is a beneficiary under

35

the policy is to be read in accordance with paragraph A5

above,

(b)   

“the statement period” means—

(i)   

the period of 3 months after the day on which the

event occurs, or

40

(ii)   

if the event occurs before the day on which the

Finance 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

45

(c)   

“prescribed” means prescribed by regulations made by the

Commissioners for Her Majesty’s Revenue and Customs.

 
 

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

215

 

      (8)  

An officer of Revenue and Customs may allow a longer period for

the purposes of sub-paragraph (7)(b) only if—

(a)   

the individual in question has made a request in writing to

an officer of Revenue and Customs for a longer period to

be allowed, and

5

(b)   

such an officer is satisfied—

(i)   

that there is a reasonable excuse for the required

statement not having been made within the period

mentioned in sub-paragraph (7)(b)(i) or (ii), and

(ii)   

that the request under paragraph (a) was made

10

without unreasonable delay after the reasonable

excuse ceased.

      (9)  

Regulations under sub-paragraph (7)(c) may—

(a)   

make different provision for different cases or

circumstances, and

15

(b)   

contain incidental, supplementary, consequential,

transitional, transitory or saving provision.”

4     (1)  

Paragraph 17 (substitutions) is amended as follows.

      (2)  

In sub-paragraph (2) before paragraph (a) insert—

“(za)   

the new policy cannot be a qualifying policy if the old

20

policy was not a qualifying policy by virtue of—

(i)   

paragraph A1(2), B1(2), B2(2) or B3(3) above, or

(ii)   

sub-paragraph (i) above or this sub-paragraph;”.

      (3)  

In sub-paragraph (2)(a) after the first “not” insert “and paragraph (za) above

does not apply”.

25

      (4)  

In sub-paragraph (4) for “(2)” substitute “(2)(a) to (c)”.

      (5)  

After sub-paragraph (4) insert—

    “(5)  

In determining under sub-paragraph (2)(a) to (c) above whether

the new policy would apart from this paragraph be a qualifying

policy, paragraph A1 above is not to be applied in relation to the

30

issue of the new policy; but this does not stop that paragraph

being applied in relation to the issue of the new policy after this

paragraph has been applied.”

5          

In paragraph 25 (application of paragraph 17 in cases involving new non-

resident policies) after sub-paragraph (2) insert—

35

   “(2A)  

In determining for the purposes of sub-paragraph (2)(a) above

whether a policy would, apart from paragraph 24, have been a

qualifying policy, paragraphs A1 and B1 to B3 above are to be

ignored.

           

(But this does not affect the application of any of those paragraphs

40

in relation to the new policy.)”.

6     (1)  

In section 55 of FA 1995 (qualifying life insurance policies: disapplication of

paragraph 21 of Schedule 15 to ICTA from appointed date) in subsection (3)

after “subject” insert “to paragraphs A1(2), B2(2) and B3(3) of that Schedule

and”.

45

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 2 — Restricted relief qualifying policies

216

 

      (2)  

The amendment made by this paragraph is treated as having come into force

on the appointed date (see section 55(9) of FA 1995).

Part 2

Restricted relief qualifying policies

7          

Chapter 9 of Part 4 of ITTOIA 2005 (gains from contracts for life insurance

5

etc) is amended as follows.

8          

After section 463 insert—

“463A   

Restricted relief qualifying policies: disapplication of section 485 etc

(1)   

This section applies for the purpose of determining if an individual

is liable for tax charged under this Chapter.

10

(2)   

In relation to an event occurring on or after 6 April 2013, section 485

(disregard of certain events in relation to qualifying policies) does

not apply in relation to a policy (“policy X”) which is a restricted

relief qualifying policy (see paragraph A2 of Schedule 15 to ICTA).

(3)   

If an individual is liable for tax charged under this Chapter as a result

15

of subsection (2), the gain on which the tax is charged in the case of

the individual is reduced by the following amount—equation: cross[char[G],over[times[char[T],char[A],char[P]],times[char[T],char[P]]]]

   

where—

G is the amount of the gain (apart from this subsection),

TAP is the total amount of premiums payable under policy X

20

during the policy X period so far as they are allowable

premiums as determined in accordance with section 463B,

and

TP is the total amount of premiums payable under policy X

during the policy X period.

25

(4)   

If section 528 also applies in the case of the individual in relation to

the gain, subsection (3) is to be applied to the gain before section 528

and, accordingly, the reduction to be made under section 528 is to be

determined by reference to the gain as reduced by subsection (3).

(5)   

The following subsections apply for the purposes of this section

30

(except subsection (2)) and section 463B.

(6)   

“The policy X period” means the period for which policy X has run

before the chargeable event occurs.

(7)   

Subsections (8) and (9) apply if policy X is a new policy in relation to

another policy.

35

(8)   

For the purposes of subsection (6) policy X is to be taken to have

run—

(a)   

from the issue of the other policy, or

(b)   

if the other policy was also a new policy in relation to an

earlier policy, from the issue of the earlier policy,

40

   

and so on.

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 2 — Restricted relief qualifying policies

217

 

(9)   

References to premiums payable under policy X are to be read as

including references to premiums payable under any earlier policy

taken into account under subsection (8).

(10)   

The following are to be left out of account in determining the

premiums payable under a policy—

5

(a)   

so much of a premium as is charged on the grounds that an

exceptional risk of death or disability is involved;

(b)   

subject to subsection (11), so much of the first premium

payable the liability for the payment of which—

(i)   

is discharged in accordance with paragraph 15(2) of

10

Schedule 15 to ICTA, or

(ii)   

in the case of a policy in relation to which paragraph

3 of that Schedule applies, is discharged under a

provision of the policy falling within paragraph

3(4)(c) of that Schedule.

15

(11)   

The maximum amount that may be left out of account under

subsection (10)(b) in the case of a 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

20

which ran for the most number of complete years.

(12)   

In determining the premiums payable under a policy any provision

for the waiver of premiums by reason of a person’s disability is to be

ignored.

(13)   

“New policy” has the meaning given in paragraph 17 of Schedule 15

25

to ICTA.

463B    

Restricted relief qualifying policies: allowable premiums

(1)   

This section sets out how to determine the extent to which premiums

payable under policy X during the policy X period are allowable

premiums for the purposes of section 463A(3).

30

(2)   

A premium payable under policy X is allowable if it is payable before

the restricted relief date.

(3)   

In this section “the restricted relief date” means—

(a)   

6 April 2013, or

(b)   

if later, the date on which policy X became a restricted relief

35

qualifying policy.

(4)   

Premiums payable under policy X in a relevant premium period are

allowable so far as they do not exceed in total the premium limit for

the period.

(5)   

In subsection (4) “relevant premium period” means—

40

(a)   

any period of one year which—

(i)   

begins with a relevant date, and

(ii)   

ends in the policy X period, and

(b)   

if it is not covered by paragraph (a), the period which—

 
 

Finance Bill
Schedule 9 — Qualifying insurance policies
Part 2 — Restricted relief qualifying policies

218

 

(i)   

begins with the last relevant date to fall within the

policy X period, and

(ii)   

ends at the end of the policy X period.

(6)   

In subsection (5) “relevant date” means—

(a)   

the restricted relief date, or

5

(b)   

any anniversary of the restricted relief date.

(7)   

For the purposes of subsection (4) “the premium limit” for a relevant

premium period is determined in accordance with subsections (8) to

(10).

(8)   

Determine the premiums payable in the relevant premium period

10

under policies related to policy X.

(9)   

If the total of those premiums is £3,600 or more, the premium limit is

nil (and, accordingly, no premiums payable under policy X in the

relevant premium period are allowable).

(10)   

If the total of those premiums is less than £3,600, the premium limit

15

is the difference between that total and £3,600.

(11)   

Subsection (4) does not apply if, at the time policy X became a

restricted relief qualifying policy, any policy related to policy X was

itself a restricted relief qualifying policy.

(12)   

For the purposes of this section a policy is “related” to policy X if it

20

met the following requirements at the time policy X became a

restricted relief qualifying policy—

(a)   

the policy is a qualifying policy under which the individual

is a beneficiary (as determined in accordance with paragraph

A5 of Schedule 15 to ICTA);

25

(b)   

the policy is neither a protected policy nor a pure protection

policy.

(13)   

In subsection (12)(b)—

“protected policy” is to be read in accordance with paragraph

A4 of Schedule 15 to ICTA, and

30

“pure protection policy” has the meaning given by paragraph

A6(1)(c) of that Schedule.

(14)   

A policy which is a new policy in relation to a policy “related” to

policy X (whether by virtue of subsection (12) or this subsection) is

also “related” to policy X if it meets the requirements of subsection

35

(12)(a) and (b) when issued.

(15)   

A policy ceases to be “related” to policy X if it ceases to meet those

requirements.

(16)   

If policy X is a restricted relief qualifying policy as provided for by

paragraph A2(14) of Schedule 15 to ICTA, references in this section

40

to policy X becoming a restricted relief qualifying policy are to be

read as references to the policy determined under subsection (17)

becoming a restricted relief qualifying policy.

(17)   

The policy is—

(a)   

the policy (“policy Y”) in relation to which policy X was the

45

new policy, or

 
 

 
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