Details of new rules for qualifying policies
42.Sub-paragraphs (1) and (2) of new paragraph B1 provide that for policies issued on or after 6 April 2013 only individuals may have beneficial ownership of all the rights.
43.Sub-paragraph (3) of new paragraph B1 disapplies the paragraph to policies protected for the purposes of new Paragraph A1.
44.Sub-paragraph (4) of new paragraph B1 defines ‘protected’ for the purposes of a new policy.
45.Sub-paragraphs (1) & (2) of new paragraph B2 provide that if any rights under a policy are assigned on or after 6 April 2013 the policy will become a non-qualifying policy after assignment.
46.Sub-paragraph (3) of new paragraph B2 sets out exceptions to sub-paragraph (2) of new paragraph B2.
47.Sub-paragraph (4) of new paragraph B2 provides that section 465(6) of ITTOIA applies for the purposes of sub-paragraph (3)(f) of new paragraph B2.
48.Sub-paragraph (5) of new paragraph B2 sets out that regulations may provide that sub-paragraph (2) of new paragraph B2 does not apply if conditions prescribed by the regulations are met.
49.Sub-paragraph (6) of new paragraph B2 describes what regulations under sub-paragraph (5) may contain.
50.Sub-paragraph (7) of new paragraph B2 provides that assignments falling within sub-paragraphs (3) or (5) of new paragraph B2 may fall within new paragraphs A1 or A2 and so may become non-qualifying or restricted relief qualifying policies following that assignment.
51.Sub-paragraph (1) of new paragraph B3 sets out which events occurring on or after 6 April 2013 will require production of a required statement to enable qualifying policy status either to come into existence or continue.
52.Sub-paragraph (2) of new paragraph B3 explains that the required statement must be provided by each individual who is a beneficiary and must be provided to the issuer of the policy before the end of the relevant period if the policy is to become or continue to be a qualifying policy.
53.Sub-paragraph (3) of new paragraph B3 explains that if no statement is provided under sub-paragraph (2) of new paragraph B3, the policy will be a non-qualifying policy.
54.Sub-paragraph (4) of new paragraph B3 defines ‘relevant period’ for the purposes of the variation of a policy falling within sub-paragraph (1)(b)(ii) of new paragraph B3.
55.Sub-paragraph (5) of new paragraph B3 provides that the required statement is not required on the issue of a policy that is a pure protection policy (as defined in sub-paragraph (1)(c) of new paragraph A6) on issue. A required statement is also not required when a pure protection policy is assigned and the assignment is one listed in sub-paragraph (3)(c) to (g) of new paragraph B2. A required statement will not be required for all other events listed in sub-paragraph (1) of new paragraph B3 where the policy is a pure protection policy both before and after the event.
56.Sub-paragraph (6) of new paragraph B3 provides that the required statement is not required where an assignment is a mortgage endowment assignment and is made to an individual in pursuance of a legally enforceable obligation relating to a divorce or the dissolution of a civil partnership.
57.Sub-paragraph (7) of new paragraph B3 provides a power for Her Majesty’s Revenue and Customs to exclude in regulations individuals from the requirement to make a statement under sub-paragraph (2) of new paragraph B3 where conditions set out in those regulations are met.
58.Sub-paragraph (8) of new paragraph B3 provides that if a statement is not required under sub-paragraph (7) of new paragraph B3, then sub-paragraph (3) of new paragraph B3 does not make the policy a non-qualifying policy.
59.Sub-paragraph (9) of new paragraph B3 provides that the reference to an individual who is a beneficiary under the policy is to be read in accordance with new paragraph A5. It defines the statement period for the purposes of sub-paragraph (2) of new paragraph B3 above. It provides the Commissioners for Her Majesty’s Revenue and Customs with the power to make regulations for the purposes of sub-paragraph (2) of new paragraph B3.
60.Sub-paragraph (10) of new paragraph B3 explains the circumstances under which an extension to the statement period may be granted by an officer of Revenue and Customs.
61.Sub-paragraph (11) of new paragraph B3 provides that sub-paragraph (12) of new paragraph B3 applies where the obligations of the issuer under a policy have been transferred to another person.
62.Sub-paragraph (12) of new paragraph B3 provides that where sub-paragraph (11) of new paragraph B3 applies a statement provided under sub-paragraph (2) of new paragraph B3 must be provided to the transferee.
63.Sub-paragraph (13) of new paragraph B3 sets out the provisions that the regulations may cover.
64.Paragraph 4 of Schedule 9 amends Paragraph 17 of Schedule 15 to ICTA applying to substitutions.
65.Paragraph 4(2) inserts a new subsection (za) in paragraph 17(2) before subsection (a).
66.New paragraph 17(2)(za) provides that a new policy issued for another policy on or after 6 April 2013 cannot be a qualifying policy if the old policy was not a qualifying policy by virtue of new paragraphs A1(2), B1(2), B2(2), or B3(3) or because it was itself a new policy refused qualifying policy status by virtue of this provision.
67.Paragraph 4(3) makes a consequential amendment to paragraph 17(2)(a) as a result of new paragraph 17(2)(za).
68.Paragraph 4(4) amends the reference to sub-paragraph (2) to a reference to sub-paragraph (2)(a) to (c)
69.Paragraph 4(5) inserts new sub-paragraph (5) in paragraph 17.
70.New paragraph 17(5) provides that whilst new paragraph A1 is not to be applied in determining whether a new policy issued for another policy is a qualifying policy for the purposes of paragraph 17, new paragraph A1 may instead be applied after paragraph 17 has been applied.
71.Paragraph 5 of Schedule 9 inserts new sub-paragraph (2A) in paragraph 25 of Schedule 15 to ICTA.
72.New paragraph 25(2A) provides that in determining for the purposes of paragraph 25 whether a policy would be a qualifying policy new paragraphs A1 and B1 to B3 are to be ignored.
73.Paragraph 6 of Schedule 9 makes amendments to section 55 Finance Act 1995 so as to have effect on the appointed date.
74.Paragraph 7 of Schedule 9 announces amendments to Chapter 9 of Part 4 of ITTOIA (gains from contracts for life insurance etc.).
75.Paragraph 8 of Schedule 9 inserts new sections 463A (restricted relief qualifying policies: disapplication of section 485 etc.); 463B (restricted relief qualifying policies: allowable premiums); 463C (restricted relief qualifying policies: personal representatives and trustees with deceased settlors); 463D (restricted relief qualifying policies: assignments and events following assignments) and 463E (transitional protection for policies issued in respect of insurances made on or after 21 March 2012 but before 6 April 2013) into ITTOIA after section 463.
76.New section 463A(1) provides that this section applies to determine if an individual is liable to tax under Chapter 9 of Part 4 of ITTOIA.
77.New section 463A(2) provides that where an event occurs on or after 6 April 2013 section 485 does not apply in relation to a restricted relief qualifying policy.
78.New section 463A(3) provides the formula for reducing the gain chargeable to tax in respect of a restricted relief qualifying policy.
79.New section 463A(4) explains that if section 528 also applies to the gain, then the reduction to the gain is calculated under new section 463A(3) prior to the application of section 528.
80.New section 463A(5) introduces subsections that apply for the purposes of this section and new section 463B.
81.New section 463A(6) defines the policy period for the restricted relief qualifying policy in question.
82.New section 463A(7) introduces new sections 463A (8) and (9) if the restricted relief qualifying policy in question is a new policy in relation to another policy.
83.New section 463A(8) sets out the period from which the restricted relief qualifying policy is to have run for the purposes of new section 463A (6).
84.New section 463A (9) sets out what the premiums payable under the restricted relief qualifying policy in question include.
85.New section 463A(10)(a) and (b) sets out which premiums are to be excluded in determining the premiums payable under a policy.
86.New section 463A(11) sets out the maximum amount that may be left out of account under new section 463A (10) (b).
87.New section 463A(12) explains that any provision for premiums to be waived due to a person’s disability are ignored when determining the premiums payable under a policy.
88.New section 463A(13) defines new policy as having the meaning given in paragraph 17 of Schedule 15 to ICTA.
89.New section 463B(1) sets out how to determine the extent to which premiums payable under the restricted relief qualifying policy in question during the period of that policy are allowable premiums for the purposes of new section 463A(3).
90.New section 463B(2) states that a premium payable under the restricted relief qualifying policy in question is allowable if it is payable before the restricted relief date.
91.New section 463B(3) defines ‘restricted relief date’.
92.New section 463B(4) provides that premiums payable under the restricted relief qualifying policy in question in a relevant premium period are allowable so far as they do not exceed in total the premium limit for the period.
93.New section 463B(5) defines ‘relevant premium period.’
94.New section 463B(6) defines ‘relevant date’ for the purposes of new section 463B (5).
95.New section 463B(7) to (10) sets out how to determine the ‘premium limit’ for a relevant premium period for the purposes of new section 463B(4).
96.New section 463B(11) confirms that new section 463B(4) does not apply if at the time the restricted relief qualifying policy became a restricted relief qualifying policy, it was not the individual’s first restricted relief qualifying policy.
97.New section 463B(12) and (13) sets out the conditions for a policy to be a related policy for the purposes of new section 463B.
98.New section 463B(14) explains when a new policy is a related policy.
99.New section 463B(15) confirms that a policy ceases to be a related policy if it no longer meets the conditions of new section 463B(12) and (13) .
100.New section 463B(16) states that if the restricted relief qualifying policy in question is a restricted relief qualifying policy by virtue of new paragraph A2(14) of Schedule 15 to ICTA then references in this section to the restricted relief qualifying policy in question becoming a restricted relief qualifying policy are to be read as references to the policy determined under new section 463B(17) becoming a restricted relief qualifying policy.
101.New section 463B(17) defines “the qualifying policy in question becoming a restricted relief qualifying policy” for the purposes of new section 463B(16). The qualifying policy in question will be the original policy in respect of which the new policy has been issued. Where a series of new policies have been issued under paragraph 17 of Schedule 15 to ICTA, the qualifying policy in question is the first original policy in that series.
102.New section 463B(18) to (21) provides a rule where a premium payable in the period from 21 March 2012 to 5 April 2013 inclusive (P1) and the next premium payable after that (P2) is payable more than one month after the date on which P1 is payable and on or after 6 April 2013. In this situation P1 is treated as if it were a series of monthly premiums instead of one single premium. The series will run from the day P1 is payable (day A) to the date P2 is payable (day B). The number of premiums due will equate to the number of complete months in the period beginning on day A and ending on day B. The amount of each monthly premium will be the amount of P1 divided by the number of complete months in the series.
103.New section 463C(1) provides that this section applies to determine if personal representatives are liable to tax under section 466.
104.New section 463C(2) provides that this section also applies to determine if trustees are liable for tax under section 467 where the rights under the policy are held in trusts and the person who created the trusts has died.
105.New section 463C(3) provides that where an event occurs on or after 6 April 2013 section 485 does not apply in relation to a restricted relief qualifying policy.
106.New section 463C(4) provides that where personal representatives or trustees are liable for tax on a gain in respect of a restricted relief qualifying policy, new section 463A(3) applies to the personal representatives or trustees as if they were the ‘individual’ referred to in that section.
107.New section 463C(5) provides that references to the ‘individual’ in new section 463B(12)(a) are to be read as references to the deceased. It also provides that policies which were related policies before the deceased’s death and which continue to run after the deceased’s death shall continue to be related policies until such time it ceases to run and, apart from the deceased’s death, meet the conditions in new section 463B(12).
108.New section 463C(6) explains when a new policy is a related policy.
109.New section 463C(7) confirms that a policy ceases to be a related policy if apart from the deceased’s death it no longer meets the conditions of new section 463B(12)(a) and (b)
110.New section 463C(8) provides that if section 528A also applies to the gain, then the reduction to the gain is calculated under new section 463A(3) prior to the application of section 528A.
111.New section 463D(1) applies where a policy is assigned or any subsequent event (including the issue of a new policy) relating to the assigned policy and that policy becomes a non-qualifying policy after the assignment or subsequent event.
112.New section 463D(2) applies the formula in new section 463A(3) to the assigned policy.
113.New section 463D(3) amends the relevant premium period defined at new section 463B(5) to include the period before the assignment.
114.New section 463D(4) provides that if section 528 also applies to the gain, then the reduction to the gain is calculated under new section 463A(3) prior to the application of section 528.
115.New section 463E(1) applies to certain policies issued on or after 21 March 2012 but before 6 April 2013. These are policies that are not restricted relief qualifying policies at issue but are varied on or after 6 April 2013 such that, as a result of the variation, they become non-qualifying.
116.New section 463E(2) provides the formula for reducing the gain chargeable to tax when this section applies.
117.New section 463E(3) explains that if section 528 also applies to the gain, then the reduced gain chargeable to tax is calculated under new section 463E(2) prior to the application of section 528.
118.New section 463E(4) applies new section 463A(10) to (12) to the reduced gain chargeable to tax under new section 463E(2).
119.Paragraph 9 of Schedule 9 amends section 485 to ensure that this section is subject to new section 463A and 463C.
120.Paragraph 10 of Schedule 9 inserts a new section 552ZB (regulations in relation to qualifying policies) in ICTA after section 552ZA.
121.New section 552ZB(1) provides the power to make regulations in relation to the provision of information to the Commissioners for Her Majesty’s Revenue and Customs by insurers about issued QPs and for the provision of information by insurers to those applying for QPs or who are required to make statements under new paragraph B3. The section also provides that the regulations may also make such provision as is necessary for enabling an officer of Her Majesty’s Revenue and Customs to check that the regulations and required under sub-paragraph B3(2) are not being contravened.
122.New section 552ZB(2) provides that records should be maintained to allow an officer of Revenue and Customs to check the regulations are not being contravened.
123.New section 552ZB(3) explains what the regulations may contain.
124.New section 552ZB(4) defines ‘prescribed’, ‘qualifying policy’ and ‘relevant person’ for the purposes of this section.
125.New section 552ZB(5) defines ‘relevant transferee’ for the purposes of that section.
126.Paragraph 11 of Schedule 9 makes amendments to section 552B of ICTA.
127.Paragraph 12 of Schedule 9 inserts the requirements under new section 552ZB into section 98 of the Taxes Management Act 1970 (TMA 1970).
