|
| |
|
section 487 (disregard of certain assignments), and |
| |
section 488 (disregard of certain events following alterations of life |
| |
| |
(3) | See also section 490 (last payment under guaranteed income bonds etc. treated |
| |
| 5 |
485 | Disregard of certain events in relation to qualifying policies |
| |
(1) | In relation to a qualifying policy, the events that count as chargeable events are |
| |
| |
(2) | Death or the maturity of the policy is only a chargeable event if— |
| |
(a) | the policy has been converted into a paid-up policy before the end of |
| 10 |
whichever of the following periods ends sooner— |
| |
(i) | 10 years from the making of the insurance, and |
| |
(ii) | three-quarters of the term for which the policy is to run |
| |
(assuming it is not ended by death or disability), or |
| |
(b) | there is a company interest in the rights under the policy immediately |
| 15 |
| |
(3) | An event specified in section 484(1)(a)(i) to (iv) (surrender or assignment of all |
| |
rights, final participation in profits and chargeable event where periodic |
| |
calculation shows gain) is only a chargeable event if— |
| |
(a) | the event occurs or the policy has been converted into a paid-up policy |
| 20 |
before the end of whichever of the periods specified in subsection |
| |
(2)(a)(i) and (ii) ends sooner, or |
| |
(b) | there is a company interest in the rights under the policy immediately |
| |
| |
(4) | For the purposes of subsections (2)(b) and (3)(b) there is a company interest in |
| 25 |
the rights under a policy if— |
| |
(a) | a company beneficially owns them, |
| |
(b) | they are held on trusts created by a company, or |
| |
(c) | they are held as security for a company’s debt. |
| |
(5) | An event specified in section 484(1)(a)(v) (part surrenders and assignments: |
| 30 |
chargeable events where transaction-related calculations show gains) is only a |
| |
| |
(a) | the time as at which the calculation showing the gain is required to be |
| |
made under section 498(2) is before the end of whichever of the periods |
| |
specified in subsection (2)(a)(i) and (ii) ends sooner, or |
| 35 |
(b) | the policy has been converted into a paid-up policy before that time. |
| |
(6) | If the policy has been varied so as to increase the premiums payable under it, |
| |
subsections (2), (3) and (5) apply as if they referred instead to the following |
| |
| |
(a) | 10 years from the variation taking effect, and |
| 40 |
(b) | three-quarters of the term for which the policy is to run from the |
| |
variation (assuming it is not ended by death or disability). |
| |
(7) | If a qualifying policy is substituted for another policy in circumstances where |
| |
paragraph 25(1) or (3) of Schedule 15 to ICTA applies (replacement of a policy |
| |
issued by a non-UK resident company by a policy which is not so issued), the |
| 45 |
surrender of the rights conferred by the other policy is not a chargeable event. |
| |
|
| |
|
| |
|
486 | Exclusion of maturity of capital redemption policies in certain circumstances |
| |
The maturity of a capital redemption policy is not a chargeable event if the |
| |
sums payable on maturity— |
| |
(a) | are chargeable to income tax because they fall within— |
| |
(i) | Chapter 7 (purchased life annuities), |
| 5 |
(ii) | Chapter 7 of Part 5 (annual payments not otherwise charged), |
| |
(iii) | section 609 of ITEPA 2003 (annuities for the benefit of |
| |
| |
(iv) | section 610 of that Act (annuities under non-registered |
| |
occupational pension schemes), or |
| 10 |
(v) | section 611 of that Act (annuities in recognition of another’s |
| |
| |
(b) | are chargeable to corporation tax under Schedule D. |
| |
487 | Disregard of certain assignments |
| |
For the purposes of this Chapter, an assignment of rights under a policy or |
| 15 |
contract or a share in such rights is ignored if it is— |
| |
(a) | by way of security for a debt, |
| |
(b) | on the discharge of a debt secured by the rights or share, or |
| |
(c) | between spouses living together. |
| |
488 | Disregard of some events after alterations of life insurance policy terms |
| 20 |
(1) | This section applies if— |
| |
(a) | the terms of a policy of life insurance are altered, |
| |
(b) | the alteration is not itself a chargeable event, and |
| |
(c) | the conditions specified in section 489 are met. |
| |
(2) | After the alteration a chargeable event is only treated as occurring in relation |
| 25 |
to the policy if one would have been treated as occurring had the alteration not |
| |
| |
(3) | If the alteration results in the policy being regarded as replaced by another, this |
| |
section and section 489 apply as if they were a single policy. |
| |
489 | Conditions applicable to alterations of life insurance policy terms |
| 30 |
(1) | Conditions A to E are the conditions referred to in section 488. |
| |
(2) | Condition A is that the policy was issued in respect of an insurance made at |
| |
least 20 years before the alteration. |
| |
(3) | Condition B is that the alteration results from a decision by the insurance |
| |
company that it will not collect further premiums due from any of the holders |
| 35 |
under a number of policies of the same description if a particular period of time |
| |
has elapsed since the contracts were made. |
| |
(4) | Condition C is that no premiums are payable or paid after the date of the |
| |
| |
(5) | Condition D is that the benefits to be provided under the policy after the |
| 40 |
alteration are the same or substantially the same as those before the alteration. |
| |
|
| |
|
| |
|
(6) | A deduction from the benefits is ignored for the purposes of subsection (5) if it |
| |
does not exceed the total net premiums which, apart from the alteration, would |
| |
have been payable under the policy between— |
| |
(a) | the date of the alteration, and |
| |
(b) | the date on which the benefits become payable. |
| 5 |
(7) | In subsection (6) “net premiums” means the premiums reduced by any tax |
| |
relief which would have been due on the premiums had they been paid. |
| |
(8) | Condition E is that the premiums payable under the policy before the |
| |
| |
(a) | have not been reduced to a nominal amount on the exercise of an |
| 10 |
option, in circumstances where the reduction is connected with a right |
| |
to surrender in part the rights conferred by the policy after the date of |
| |
| |
(b) | are not capable of being so reduced in such circumstances. |
| |
490 | Last payment under guaranteed income bonds etc. treated as total surrender |
| 15 |
(1) | This section applies to a payment that would fall within section 500(d) |
| |
(payments under guaranteed income bonds etc. treated as surrenders of part |
| |
of the rights under the contract) apart from section 504(5) (which prevents |
| |
payments comprising the whole of the last benefit to be paid under such |
| |
contracts from being so treated). |
| 20 |
(2) | The payment is treated for the purposes of this Chapter as the surrender of all |
| |
the rights under the contract. |
| |
(3) | A payment to which this section applies is not regarded as interest or as an |
| |
annual payment for any income tax purposes. |
| |
Calculating gains: general |
| 25 |
491 | Calculating gains: general rules |
| |
(1) | This section deals with calculating— |
| |
(a) | whether a gain has arisen on a chargeable event within section |
| |
484(1)(a)(i) to (iii) or (b) to (e) (surrender or assignment of all rights, |
| |
final participation in profits, death, maturity, or taking a capital sum as |
| 30 |
a complete alternative to annuity payments), and |
| |
(b) | if so, the amount of the gain. |
| |
(2) | There is a gain if TB exceeds the sum of TD and PG where— |
| |
TB is the total benefit value of the policy or contract (see section 492), |
| |
TD is the total allowable deductions for the policy or contract (see section |
| 35 |
| |
PG is the total amount of gains treated as arising on calculation events |
| |
occurring in relation to the policy or contract before the chargeable |
| |
| |
(3) | The gain is equal to the excess. |
| 40 |
| |
“calculation event” means an excess event, a part surrender or assignment |
| |
event or a personal portfolio bond event, |
| |
|
| |
|
| |
|
“excess event” means a chargeable event within section 509(1), |
| |
“part surrender or assignment event” means a chargeable event within |
| |
| |
“personal portfolio bond event” means a chargeable event within section |
| |
| 5 |
(5) | The reference to the policy in the definition of “PG” in subsection (2) includes |
| |
| |
(6) | For the purposes of this Chapter, a policy (“policy A”) is a related policy as |
| |
respects another (“policy B”) if— |
| |
(a) | policy B is a new policy (as defined in paragraph 17 of Schedule 15 to |
| 10 |
ICTA (substitutions and variations)) in relation to policy A, or |
| |
(b) | policy B is a new policy (as so defined) in relation to another policy |
| |
(“policy C”) and policy C is a new policy (as so defined) in relation to |
| |
| |
| 15 |
(7) | See section 539 (relief for deficiencies) if there is no gain under subsection (2), |
| |
but a gain arose on a calculation event occurring in relation to the policy or |
| |
contract before the chargeable event in question. |
| |
(8) | For the rules about calculating gains on calculation events, see— |
| |
section 507 (method for making periodic calculations under section 498), |
| 20 |
section 511 (method for making transaction-related calculations under |
| |
| |
section 522 (method for making annual calculations under section 515). |
| |
492 | The total benefit value of a policy or contract |
| |
(1) | To calculate the total benefit value of a policy or contract for the purposes of |
| 25 |
section 491, add together— |
| |
(a) | its value in accordance with section 493, |
| |
(b) | any capital sum paid under the policy or contract before the event, |
| |
(c) | the value of any other benefit of a capital nature conferred by the policy |
| |
or contract before the event, |
| 30 |
(d) | the amount of any loan made before the event, the making of which is |
| |
treated as the surrender of a part of the rights under the policy or |
| |
contract under section 500(c) (loans by insurers to which section 501 |
| |
| |
(e) | in the case of a guaranteed income bond contract, as defined in section |
| 35 |
504(7), any amount paid before the event, the payment of which is |
| |
treated as a surrender of a part of the rights under the contract under |
| |
section 500(d) of this Act (payments by insurers under such contracts), |
| |
| |
(f) | in the case of an assignment, the amount or value of any share in the |
| 40 |
rights under the policy or contract that was assigned before the event. |
| |
(2) | References to the policy in subsection (1)(b) to (e) include any related policy. |
| |
(3) | This section is subject to— |
| |
section 495 (disregard of certain amounts in calculating gains under |
| |
| 45 |
section 497 (disregard of trivial inducement benefits). |
| |
|
| |
|