SCHEDULES

SCHEDULE 4Amendments of Income Tax Acts and Corporation Tax Acts

PART IIOther Amendments

Purchased life annuity of variable amount

8(1)In section 230 of the Taxes Act after subsection (2) insert—

“((2a))Where, in the case of any purchased life annuity to which this section applies, the amount of any annuity payment (but not the term of the annuity) depends on any contingency other than the duration of a human life or lives—

(a)the capital element shall be determined by reference—

(i)to the amount or value of the payments made or other consideration given for the grant of the annuity (in this subsection referred to as the ' purchase price' of the annuity), and

(ii)to the expected term of the annuity, as at the date when the first annuity payment began to accrue, expressed in years (and any odd fraction of a year), and determined by reference to the prescribed tables of mortality,

and in head (ii) above ' term' means the period from the date when the first annuity payment begins to accrue to the date when the last payment becomes payable,

(b)the capital element in any annuity payment made in respect of a period of twelve months shall be a fraction of the purchase price, where E is the said expected term,

(c)the capital element in any annuity payment made in respect of a period of less than, or more than, twelve months shall be the amount at (b) above reduced, or as the case may be increased, in the same proportion as the length of that period bears to a period of twelve months,

(d)subsection (2) above shall not apply, but paragraphs (a) and (b) of subsection (3) below shall apply as they apply to that subsection,

and in applying subsection (2)(d) above where both the amount and the term of the annuity depend on any contingency other than the duration of a human life or lives, regard shall be had to this subsection (and not to subsection (2)(c) above) as well as to the contingencies affecting the annuity.”

(2)This paragraph has effect for the year 1970-71 and subsequent years of assessment, whether or not annuity payments under the annuity fell due before the beginning of the year 1970-71.