Finance Act 1983

Section 18.

SCHEDULE 4 Events Restoring the Income Tax Charge in Connection with Assigned Life Policies and Annuity Contracts

1 (1) In this Schedule " assigned policy " means a policy of life assurance—

(a) which was issued in respect of an insurance made before 26th June 1982 ; and

(b) the rights conferred by which have been assigned for money or money's worth before that date; and

(c) in relation to which an event occurring on or after that date would not, apart from the provisions of this Schedule, be a chargeable event

(2) In this Schedule " assigned contract" means a contract for a life annuity—

(a) which was made before 26th June 1982 ; and

(b) the rights conferred by which have been assigned for money or money's worth before that date; and

(c) in relation to which an event occurring on or after that date would not, apart from the provisions of this Schedule, be a chargeable event

2 (1) The relevant provision shall cease to apply to an assigned policy or assigned contract if, after 23rd August 1982.—

(a) the rights conferred by the policy or contract are again assigned for money or money's worth; or

(b) a payment is made by way of premium or as lump sum consideration under the policy or contract; or

(c) subject to paragraph 3 below, a sum is lent by or by arrangement with the body issuing the policy or, as the case may be, the body with which the contract was made.

(2) No account shall be taken for the purposes of sub-paragraph (1)(a) above of any assignment effected by way of security for a debt, or on the discharge of a debt secured by the rights concerned, or of an assignment between spouses living together.

3 (1) Paragraph 2(1)(c) above does not apply unless—

(a) the policy was issued in respect of an insurance made after 26th March 1974 or, as the case may be, the contract was made after that date ; and

(b) the sum concerned is lent to or at the direction of the individual who, in accordance with sub-paragraph (2) below, is at the time of the loan the chargeable individual.

(2) The individual who is at any time the chargeable individual for the purposes of sub-paragraph (1)(b) above shall be determined as follows.—

(a) if at the time the rights conferred by the policy or contract are vested in an individual as beneficial owner or are held on trusts created by an individual (including such trusts as are referred to in section 399(1)(a) of the Taxes Act), that individual is the chargeable individual; and

(b) if at the time those rights are held as security for a debt owed by an individual, that individual is the chargeable individual.

(3) Paragraph 2(1)(c) above does not apply in relation to a policy if—

(a) it is a qualifying policy within the meaning of Schedule 1 to the Taxes Act; and

(b) either interest at a commercial rate is payable on the sum lent or the sum is lent to a full-time employee of the body issuing the policy for the purpose of assisting him in the purchase or improvement of a dwelling-house to be used as his only or main residence.

4 Where the relevant provision ceases to apply to an assigned policy or assigned contract by virtue of paragraph 2(1)(c) above, the lending of the sum concerned shall be regarded for the purposes of the Income Tax Acts (other than that paragraph) as taking place immediately after the time at which the relevant provision ceases so to apply.