(1)The rights of the insurer under any policy of insurance shall not constitute an asset on the disposal of which a gain may accrue, whether the risks insured relate to property or not; and the rights of the insured under any policy of insurance of the risk of any kind of damage to, or the loss or depreciation of, assets shall constitute an asset on the disposal of which a gain may accrue only to the extent that those rights relate to assets on the disposal of which a gain may accrue or might have accrued.
(2)Notwithstanding subsection (1) above, sums received under a policy of insurance of the risk of any kind of damage to, or the loss or depreciation of, assets are for the purposes of this Act, and in particular for the purposes of section 20 above (disposal of assets by owner where any capital sum is derived from assets), sums derived from the assets.
(3)In this section “policy of insurance” does not include a policy of assurance on human life.
Modifications etc. (not altering text)
Without prejudice to the provisions of section 33 above (exclusion of expenditure by reference to tax on income), there shall be excluded from the sums allowable as a deduction in the computation under Part II of Chapter II above of the gain accruing to a person on the disposal of an asset any premiums or other payments made under a policy of insurance of the risk of any kind of damage or injury to, or loss or depreciation of, the asset.
(1)An underwriting member of Lloyd’s or of an approved association of underwriters shall, subject to the following provisions of this section, be treated for the purposes of this Act as absolutely entitled as against the trustees to the investments of his premiums trust fund, his special reserve fund (if any) and any other trust fund required or authorised by the rules of Lloyd’s or the association in question, or required by the underwriting agent through whom his business or any part of it is carried on, to be kept in connection with the business.
(2)The trustees of any premiums trust fund shall, subject to [F1subsections (2A) and (3)] below, be assessed and charged to capital gains tax as if subsection (1) above had not been passed.
[F2(2A)Tax assessed by virtue of subsection (2) above for a year of assessment shall be assessed at a rate equivalent to the basic rate of income tax for the year; and if an assessment to tax at a higher rate is subsequently made on an underwriting member in respect of the same gains, an appropriate credit shall be given for the tax assessed on the trustees.]
(3)The assessment to be made on the trustees of a fund by virtue of subsection (2) above for any year of assessment shall not take account of losses accruing in any previous year of assessment, and if for that or any other reason the tax paid on behalf of an underwriting member for any year of assessment by virtue of assessments so made exceeds the capital gains tax for which he is liable, the excess shall, on a claim by him, be repaid.
(4)For the purposes of subsections (2) and (3) above the underwriting agent may be treated as a trustee of the premiums trust fund.
Textual Amendments
F1Words substituted by Finance Act 1988 (c. 39, SIF 63;1, 2), s. 101 for 1988–89 and subsequent years
F2S. 142(2A) inserted by Finance Act 1988 (c. 39, SIF 63;1, 2), s. 101 for 1988–89 and subsequent years
Modifications etc. (not altering text)
C2See Income and Corporation Taxes Act 1988 (c. 1, SIF 63:1), s. 450 and the Lloyd's Underwriters (Tax) Regulations 1974 (S.I. 1974 No. 896)
(1)Subject to subsection (4) below, for the year 1972-73 and subsequent years of assessment the chargeable gains or allowable losses accruing on the disposal of assets forming part of a premiums trust fund shall be taken to be those allocated to the corresponding underwriting year.
(2)The amount of the gains or losses so allocated at the end of any accounting period shall be such proportion of the difference mentioned in subsection (3) below as is allocated to the underwriting year under the rules or practice of Lloyd’s.
(3)That difference is the difference between the valuations at the beginning and at the end of the accounting period of the assets forming part of the fund, the value at the beginning of the period of assets acquired during the period being taken as the cost of acquisition and the value at the end of the period of assets disposed of during the period being taken as the consideration for the disposal.
(4)Subsections (1) to (3) above do not apply to the computation of chargeable gains or allowable losses on the disposal of gilt-edged securities as defined in Schedule 2 to this Act or of qualifying corporate bonds as defined in section 64 of the Finance Act 1984.
[F4(4A)Subsection (4B) below applies where the following state of affairs exists at the beginning of an accounting period or the end of an accounting period—
(a)securities have been transferred by the trustees of a premiums trust fund in pursuance of an arrangement mentioned in section 129(1) or (2) of the Taxes Act 1988 (stock lending),
(b)the transfer was made to enable another person to fulfil a contract or to make a transfer,
(c)securities have not been transferred in return, and
(d)the transfer made by the trustees constitutes a disposal which by virtue of section 149B(9) below is to be disregarded as there mentioned.
(4B)The securities transferred by the trustees shall be treated for the purposes of subsection (3) above as if they formed part of the premiums trust fund at the beginning concerned or the end concerned (as the case may be).]
(5)The Board may, by regulations made by statutory instrument which shall be subject to annulment in pursuance of a resolution of the House of Commons, provide—
(a)for the assessment and collection of tax charged in accordance with this section;
(b)for modifying the provisions of this section in relation to syndicates continuing for more than two years after the end of an underwriting year;
(c). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . F5
(d)for giving credit for foreign tax.]
[F6(6)Regulations under subsection (5) above may make provision with respect to any year or years of assessment; and the year (or any of the years) may be the one in which the regulations are made or any year falling before or after that year.
(7)But the regulations may not make provision with respect to any year of assessment which precedes the next but one preceding the year of assessment in which the regulations are made.]
Subordinate Legislation Made
P1S. 142A(5)(6) power exercised by S.I.1991/851.
Textual Amendments
F4S. 142A(4A)(4B) inserted by Finance Act 1989 (c. 26, SIF 63:2), s. 91(2) in the case of transfers made by trustees after 18 August 1989 (by virtue of S.I. 1989 No. 1299)
F5S. 142A(5)(c) repealed by Finance Act 1989 (c. 26, SIF 63:2), ss. 92(3), 187 and Sch. 17 Part VII
(1)This section has effect as respects any policy of assurance or contract for a deferred annuity on the life of any person.
(2)No chargeable gain shall accrue on the disposal of, or of an interest in, the rights under any such policy of assurance or contract except where the person making the disposal is not the original beneficial owner and acquired the rights or interest for a consideration in money or money’s worth.
(3)Subject to subsection (2) above, the occasion of—
(a)the payment of the sum or sums assured by a policy of assurance, or
(b)the transfer of investments or other assets to the owner of a policy of assurance in accordance with the policy,
and the occasion of the surrender of a policy of assurance, shall be the occasion of a disposal of the rights under the policy of assurance.
(4)Subject to subsection (2) above, the occasion of the payment of the first instalment of a deferred annuity, and the occasion of the surrender of the rights under a contract for a deferred annuity, shall be the occasion of a disposal of the rights under the contract for a deferred annuity and the amount of the consideration for the disposal of a contract for a deferred annuity shall be the market value at that time of the right to that and further instalments of the annuity.