Modifications etc. (not altering text)
C1Pt. 13 Ch. 2 restricted (with effect in accordance with s. 105(1) of the affecting Act) by Finance Act 1996 (c. 8), Sch. 13 para. 3(2) (with Sch. 13 para. 16)
C2Pt. 13 Ch. 2 applied (with modifications) (6.4.1999) by The Individual Savings Account Regulations 1998 (S.I. 1998/1870), regs. 35(7), 36(3)-(7) (as amended by The Individual Savings Account (Amendment) Regulations 1998 (S.I. 1998/3174), reg. 12)
C3Pt. 13 Ch. 2 applied (with modifications) (6.4.1999 with effect in accordance with reg. 1 of the affecting S.I.) by The Personal Portfolio Bonds (Tax) Regulations 1999 (S.I. 1999/1029), reg. 6(2)-(8) (as amended (6.4.2002) by The Personal Portfolio Bonds (Tax) (Amendment) Regulations 2002 (S.I. 2002/455), regs. 1, 2)
(1)M1This Chapter shall have effect for the purposes of imposing, in the manner and to the extent therein provided, charges to tax,F1. . . , in respect of gains to be treated in accordance with this Chapter as arising in connection with policies of life insurance, contracts for life annuities and capital redemption policies.
(2)M2Nothing in this Chapter shall apply—
(a)to any policy of life insurance having as its sole object the provision on an individual’s death or disability of a sum substantially the same as any amount then outstanding under a mortgage of his residence, or of any premises occupied by him for the purposes of a business, being a mortgage the principal amount secured by which is repayable by instalments payable annually or at shorter regular intervals; or
(b)to any policy of life insurance issued in connection with an approved scheme, as defined in Chapter I of Part XIV; or
(c)M3to a policy of insurance which constitutes, or is evidence of, a contract for the time being approved under section 621[F2; or
(d)to any policy of life insurance held in connection with a personal pension scheme, within the meaning of Chapter IV of Part XIV, for the time being approved under that Chapter].
In the application of this subsection to Scotland, for the reference to a mortgage there shall be substituted a reference to a heritable security within the meaning of the M4Conveyancing (Scotland) Act 1924 (but including a security constituted by ex facie absolute disposition or assignation).
(3)M5In this Chapter—
“assignment”, in relation to Scotland, means an assignation;
“capital redemption policy” means any [F3contract] effected in the course of a capital redemption business as defined in section 458(3);
[F4 “friendly society” means the same as in the Friendly Societies Act 1992 (and includes any society that by virtue of section 96(2) of that Act is to be treated as a registered friendly society within the meaning of that Act);] and
“life annuity” means any annuity to which sections 656 and 657 apply and any annuity the contract for which is made on or after 1st June 1984 by a friendly society or branch thereof in the course of life or endowment business as defined in section 466.
[F5(3A)References in this Chapter to assignment of the whole of, or assignment of part of or a share in, the rights conferred by a policy or contract shall, in any case where section 546A applies, be construed in accordance with that section.]
(4)M6For the purposes of this Chapter the falling due of a sum payable in pursuance of a right conferred by a policy or contract to participate in profits shall be treated as the surrender of rights conferred by the policy or contract.
(5)M7This Chapter shall have effect only as respects policies of life insurance issued in respect of insurances made after 19th March 1968, contracts for life annuities entered into after that date, and capital redemption policies effected after that date.
(6)A policy of life insurance issued in respect of an insurance made on or before 19th March 1968 shall be treated for the purposes of subsection (5) above and the following provisions of this Chapter as issued in respect of one made after that date if it is varied after that date so as to increase the benefits secured or to extend the term of the insurance.
(7)A variation effected before the end of the year 1968 shall be disregarded for the purposes of subsection (6) above if its only effect was to bring into conformity with paragraph 2 of Schedule 9 to the Finance Act 1968 (which is re-enacted, as amended, by paragraph 2 of Schedule 15 to this Act) a policy previously conforming therewith except as respects the amount guaranteed on death, and no increase was made in the premiums payable under the policy.
(8)Subsections (1) to (7) above do not apply in relation to section 554.
[F6(9)A policy of life insurance issued in respect of an insurance made before 14th March 1989 shall be treated for the purposes of sections 540(5A), 547(8) and 548(3A) as issued in respect of one made on or after that date if it is varied on or after that date so as to increase the benefits secured or to extend the term of the insurance; and any exercise of rights conferred by the policy shall be regarded for this purpose as a variation.]
Textual Amendments
F1Words in s. 539(1) repealed (with effect in accordance with Sch. 17 Pt. 5 Note 6 of the repealing Act) by Finance Act 1989 (c. 26), Sch. 17 Pt. 5
F2S. 539(2)(d) and preceding word inserted (with effect in accordance with Sch. 13 para. 2(3) of the amending Act) by Finance Act 2000 (c. 17), Sch. 13 para. 2(2) (with Sch. 13 Pt. 2)
F3S. 539(3): word in definition of "capital redemption policy" substituted (with effect in accordance with s. 168(6) of the amending Act) by Finance Act 1996 (c. 8), s. 168(4)
F4S. 539(3): definition of "friendly society" inserted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 para.15; S.I. 1993/236, art. 2
F5S. 539(3A) inserted (with effect in accordance with s. 83(2) of the amending Act) by Finance Act 2001 (c. 9), Sch. 28 para. 2
F6S. 539(9) inserted (with effect in accordance with Sch. 9 para. 8 of the amending Act) by Finance Act 1989 (c. 26), Sch. 9 para. 2
Marginal Citations
M1Source-1970 s.393(1); 1971 Sch.6 41; 1972 Sch.24 23
M2Source-1970 s.393(2)(a), (c); 1971 Sch.3 11
M3Source-1970 s.393(2A); 1971 Sch.2 6
M5Source-1970 s.393(3); 1985 s.41(8) 56, Sch. 9 para. 15
M6Source-1975 Sch.2 15
M7Source-1970 s.393(4), (5)