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Finance Act 2002

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This is the original version (as it was originally enacted).

Qualified exclusion: contract held by company to provide insurance benefits

8(1)Paragraph 4 does not prevent a relevant contract to which this paragraph applies from being a derivative contract.

(2)This paragraph applies to a relevant contract of a company if—

(a)the company is a company carrying on long-term insurance business,

(b)the relevant contract is or was entered into or acquired by the company in order to provide such benefits as are described in sub-paragraph (3), and

(c)the underlying subject matter of the relevant contract consists, or is treated as consisting, wholly of—

(i)shares in a company,

(ii)rights of a unit holder under a unit trust scheme, or

(iii)assets representing a loan relationship to which either section 92 or 93 of the Finance Act 1996 applies.

(3)The benefits referred to in sub-paragraph (2)(b) are benefits under policies of life insurance or capital redemption policies where—

(a)the terms of the policy or contract permit part of the rights conferred by the policy or contract to be surrendered by the holder of the policy or contract at intervals of one year or less, and

(b)the amount which may be paid on the surrender of such part of the rights conferred equates, in substance, to the return on an investment of money at interest.

(4)Paragraph 9 applies for the purpose of determining whether the underlying subject matter of a relevant contract is to be treated as consisting wholly of the property referred to in sub-paragraph (2)(c).

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