Income and Corporation Taxes Act 1988

CHAPTER I U.K. PERSONAL RELIEFS

The reliefs U.K.

256 General. U.K.

F1 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F1 S. 256 omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(a)

[F2 256A Meaning of “adjusted net income” U.K.

F3 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F2 Ss. 256A, 256B inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 28 (with Sch. 2)

F3 S. 256A omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(b)

256B Meaning of “the minimum amount” U.K.

F4 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F2 Ss. 256A, 256B inserted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 28 (with Sch. 2)

F4 S. 256B omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(c)

257 Personal allowance. U.K.

F5 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F5 S. 257 omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(d)

[F6 257AA Children’s tax credit. U.K.

F7 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F6 S. 257AA inserted (with effect in accordance with s. 30(5) of the amending Act) by Finance Act 1999 (c. 16), s. 30(1)

F7 S. 257AA repealed (6.4.2003) by Tax Credits Act 2002 (c. 21), s. 61, Sch. 6; S.I. 2003/962, art. 2(3)(e), Sch. 1 (with arts. 3, 5)

257A Married couple’s allowance[F8 (pre-5th December 2005 marriages)]. U.K.

F9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F8 Words in s. 257A heading inserted (5.12.2005 with effect in accordance with reg. 1(4) of the amending S.I.) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 51(5)

F9 Ss. 257A-257BB omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(e)

[F10 257AB Married couple's allowance (post-5th December 2005 marriages and civil partnerships etc.) U.K.

F11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F10 S. 257AB inserted (5.12.2005 with effect in accordance with reg. 1(4) of the amending S.I.) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 52

F11 Ss. 257A-257BB omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(e)

[F12 257BA Elections as to transfer of relief under section 257A [F13 or 257AB]. U.K.

F14 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F12 Ss. 257BA, 257BB substituted for s. 257B (16.7.1992 with application in relation to tax for the year 1993-94 and subsequent years of assessment) by Finance (No. 2) Act 1992 (c. 48), s. 20, Sch. 5 paras.2, 10.

F13 Words in s. 257BA heading inserted (5.12.2005 with effect in accordance with reg. 1(4) of the amending S.I.) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 53(9)

F14 Ss. 257A-257BB omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(e)

F16 257BB Transfer of relief under section 257A where relief exceeds income[F15 or 257AB.] U.K.

F17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F15 Words in s. 257BB heading inserted (5.12.2005 with effect in accordance with reg. 1(4) of the amending S.I.) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 54(6)

F16 Ss. 257BA, 257BB substituted for s. 257B (16.7.1992 with application in relation to tax for the year 1993-94 and subsequent years of assessment) by Finance (No. 2) Act 1992 (c. 48), s. 20, Sch. 5 paras.2, 10.

F17 Ss. 257A-257BB omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(e)

F18 257B. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

257C Indexation of amounts in [F22 sections 256B, 257][F23 , 257A and 257AB]. U.K.

F24 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F22 Words in s. 257C sidenote substituted (6.4.2007 with effect in accordance with s. 1034(1) of the amending Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 34(3) (with Sch. 2)

F23 Words in s. 257C sidenote substituted (5.12.2005 with effect in accordance with reg. 1(4) of the amending S.I.) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 55(d)

F24 S. 257C omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(f)

257D Transitional relief: husband with excess allowances. U.K.

F25 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F25 Ss. 257D-257F repealed (with effect in accordance with s. 32(4), Sch. 20 Pt. 3(3) Note of the repealing Act) by Finance Act 1999 (c. 16), s. 32(2), Sch. 20 Pt. 3(3)

257E Transitional relief: the elderly. U.K.

F26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F26 Ss. 257D-257F repealed (with effect in accordance with s. 32(4), Sch. 20 Pt. 3(3) Note of the repealing Act) by Finance Act 1999 (c. 16), s. 32(2), Sch. 20 Pt. 3(3)

257F Transitional relief: separated couples. U.K.

F27 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F27 Ss. 257D-257F repealed (with effect in accordance with s. 32(4), Sch. 20 Pt. 3(3) Note of the repealing Act) by Finance Act 1999 (c. 16), s. 32(2), Sch. 20 Pt. 3(3)

F28 258 Widower’s or widow’s housekeeper. U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F28 S. 258 repealed (1988-89 and subsequent years) by Finance Act 1988 (c. 39), s. 25(3), Sch.14 Part IV

259 Additional relief in respect of children. U.K.

F29 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F29 Ss. 259-261A repealed (with effect in accordance with s. 33(2), Sch. 20 Pt. 3(4) Note of the repealing Act) by Finance Act 1999 (c. 16), s. 33(1), Sch. 20 Pt. 3(4)

260 Apportionment of relief under section 259. U.K.

F30 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F30 Ss. 259-261A repealed (with effect in accordance with s. 33(2), Sch. 20 Pt. 3(4) Note of the repealing Act) by Finance Act 1999 (c. 16), s. 33(1), Sch. 20 Pt. 3(4)

261 Claims under section 259 for year of marriage. U.K.

F31 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F31 Ss. 259-261A repealed (with effect in accordance with s. 33(2), Sch. 20 Pt. 3(4) Note of the repealing Act) by Finance Act 1999 (c. 16), s. 33(1), Sch. 20 Pt. 3(4)

[F32 261A Additional relief in respect of children for year of separation. U.K.

F33 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .]

Textual Amendments

F32 S. 261A inserted (16.7.1992 with application in relation to tax for the year 1993-94 and subsequent years of assessment) by Finance (No. 2) Act 1992 (c. 48), s. 20, Sch. 5 paras.6, 10.

F33 Ss. 259-261A repealed (with effect in accordance with s. 33(2), Sch. 20 Pt. 3(4) Note of the repealing Act) by Finance Act 1999 (c. 16), s. 33(1), Sch. 20 Pt. 3(4)

262 Widow’s bereavement allowance. U.K.

F34 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F34 S. 262 repealed (with effect in accordance with s. 34(2), Sch. 20 Pt. 3(5) Note 1 of the repealing Act) by Finance Act 1999 (c. 16), s. 34(1), Sch. 20 Pt. 3(5) (with s. 34(3))

F35 263 Dependent relatives. U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F35 S. 263 repealed (1988-89 and subsequent years) by Finance Act 1988 (c. 39), s. 25(3), Sch.14 Part IV

F36 264 Claimant depending on services of a son or daughter. U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F36 S. 264 repealed (1988-89 and subsequent years) by Finance Act 1988 (c. 39), s. 25(3), Sch.14 Part IV

265 Blind person’s allowance. U.K.

F37 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F37 S. 265 omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(g)

266 Life assurance premiums. U.K.

(1) M1 Subject to the provisions of this section, [F38 section 274 and Schedules 14 and 15 and sections 192 to 194 of the Finance Act 2004,] an [F39 eligible individual] who pays any such premium as is specified in subsection (2) below F40 . . . shall (without making any claim) be entitled to relief under this section.

[F41 (1A) For the purposes of subsection (1) above an individual is an eligible individual if the individual—

(a) is resident in the United Kingdom, or

(b) meets the conditions in section 56(3) of ITA 2007.]

(2) M2 The premiums referred to in subsection (1) above are any premiums paid by an individual under a policy of insurance or contract for a deferred annuity, where—

(a) the payments are made to —

[F42 (i) a person who has permission under Part 4 of the Financial Services and Markets Act 2000 or under paragraph 15 of Schedule 3 to that Act (as a result of qualifying for authorisation under paragraph 12(1) of that Schedule) to effect or carry out contracts of long-term insurance; or

(ii) a member of the Society who effects or carries out contracts of long-term insurance in accordance with Part 19 of the Financial Services and Markets Act 2000;]

(iv) in the case of a deferred annuity, the National Debt Commissioners; and

(b) the insurance or, as the case may be, the deferred annuity is on the life of the individual or on the life of his spouse [F43 or civil partner]; and

(c) the insurance or contract was made by him or his spouse [F43 or civil partner].

(3) Subject to subsections F44 . . . (10) and (11) below, no relief under this section shall be given—

(a) M3 except in respect of premiums payable under policies for securing a capital sum on death, whether in conjunction with any other benefit or not;

(b) M4 in respect of premiums payable under any policy issued in respect of an insurance made after 19th March 1968 unless the policy is a qualifying policy;

(c) M5 in respect of premiums payable under any policy issued in respect of an insurance made after 13th March 1984 F45 . . . ;

(d) M6 in respect of premiums payable during the period of deferment in respect of a policy of deferred assurance.

(4) M7 Subject to [F46 subsection] (8) below, relief under this section in respect of any premiums paid by an individual in a year of assessment shall be given by making good to the person to whom they are paid any deficiency arising from the deductions authorised under subsection (5) below; and this section and Schedule 14 shall have effect in relation to any premium or part of a premium which is paid otherwise than in the year of assessment in which it becomes due and payable as if it were paid in that year.

(5) Subject to the provisions of Schedule 14—

(a) an individual resident in the United Kingdom who is entitled to relief under this section in respect of any premium may deduct from any payment in respect of the premium and retain an amount equal to [F47 12.5 per cent] of the payment; and

(b) the person to whom the payment is made shall accept the amount paid after the deduction in discharge of the individual’s liability to the same extent as if the deduction had not been made and may recover the deficiency from the Board.

(6) F48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(6A) F48 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(7) F49 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(8) M8 Where the individual is not resident in the United Kingdom [F50 (but is entitled to relief by virtue of subsection (1A)(b))], subsection (4) above shall not apply but F51 . . . the like relief shall be given to him under paragraph 6 of Schedule 14.

(9) M9 Subsections (5) and (8) above shall apply in relation to an individual who is not resident in the United Kingdom but is a member of the armed forces of the Crown or the [F52 spouse][F53 or civil partner] of such a member as if the individual were so resident.

(10) M10 Subsection (3)(b) above shall not 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.

In the application of this subsection to Scotland, for any reference to a mortgage there shall be substituted a reference to a heritable security within the meaning of the M11 Conveyancing (Scotland) Act 1924 (but including a security constituted by ex facie absolute disposition or assignation).

(11) M12 Subsection (3)(a) and (d) above shall not affect premiums payable—

(a) under policies or contracts made in connection with any superannuation or bona fide pension scheme for the benefit of the employees of any employer, or of persons engaged in any particular trade, profession, vocation or business, or for the benefit of the [F54 spouse, [F55 civil partner,] widow, widower [F56 , surviving civil partner] or children or other dependants of any such employee or person,] or

(b) under policies taken out by teachers in the schools known in the year 1918 as secondary schools, pending the establishment of a superannuation or pension scheme for those teachers.

(12) Schedule 14 shall have effect for the purpose of modifying, for certain cases, and supplementing the provisions of this section.

[F57 (13) In F58 . . . Schedule 14, “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).]

[F59 (14) In subsection (2)(a)—

• “contracts of long-term insurance” means contracts which fall within Part II of Schedule 1 to the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001; and

• “member of the society” has the same meaning as in Lloyd’s Act 1982 M13 .]

Textual Amendments

F38 Words in s. 266(1) substituted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 9 (with Sch. 36)

F39 Words in s. 266(1) substituted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2009 (c. 10), Sch. 1 para. 3(2)(a)

F40 Words in s. 266(1) omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 3(2)(b)

F41 S. 266(1A) inserted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2009 (c. 10), Sch. 1 para. 3(3)

F42 S. 266(2)(a)(i)(ii) substituted for s. 266(2)(a)-(iii) (1.12.2001 in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 18(2)

F43 Words in s. 266(2)(b)(c) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 57(2)

F44 Word in s. 266(3) omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 3(4)

F45 Words in s. 266(3)(c) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 36(2), Sch. 3 Pt. 1 (with Sch. 2)

F46 Words in s. 266(4) substituted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2009 (c. 10), Sch. 1 para. 3(5)

F47 Words in s. 266(5)(a) substituted (from 6.4.1989) by Finance Act 1988 (c. 39), s. 29

F48 S. 266(6)(6A) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 36(4), Sch. 3 Pt. 1 (with Sch. 2)

F49 S. 266(7) omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 3(6)

F50 Words in s. 266(8) substituted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2009 (c. 10), Sch. 1 para. 3(7)

F51 Words in s. 266(8) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 36(6)(c), Sch. 3 Pt. 1 (with Sch. 2)

F52 Words in s. 266(9) substituted (1990-91 and subsequent years) by Finance Act 1988 (c. 39), s. 35, Sch. 3 para. 9(a)

F53 Words in s. 266(9) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 57(3)

F54 Words in s. 266(11)(a) substituted (1990-91 and subsequent years) by Finance Act 1988 (c. 39), s. 35, Sch. 3 para. 9(b)

F55 Words in s. 266(11)(a) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 57(4)(a)

F56 Words in s. 266(11)(a) inserted (5.12.2005) by The Tax and Civil Partnership Regulations 2005 (S.I. 2005/3229), regs. 1(1), 57(4)(b)

F57 S. 266(13) inserted (19.2.1993) by Finance (No. 2) Act 1992 (c. 48), s. 56, Sch. 9 paras. 2(3); S.I. 1993/236, art.2

F58 Words in s. 266(13) repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 36(7), Sch. 3 Pt. 1 (with Sch. 2)

F59 S. 266(14) added (1.12.2001 in accordance with art. 1(2)(a) of the amending S.I.) by The Financial Services and Markets Act 2000 (Consequential Amendments) (Taxes) Order 2001 (S.I. 2001/3629), art. 18(3)

Modifications etc. (not altering text)

C2 S. 266 relief abolished and s. 266 restricted by Finance Act 2012 (c. 14), Sch 39 para. 23

Marginal Citations

M1 Source-1970 s.19(1); 1976 Sch.4 3(1)

M2 Source-1970 s.19(2); 1976 s.36(5), Sch.4 3(2)

M3 Source-1970 s.19(3)(a)

M4 Source-1970 s.19(4)

M5 Source-1984 s.72(1)

M6 Source-1970 s.19(3)(b)

M7 Source-1976 Sch.4 4(1) 5; 1978 Sch.3 2; 1980 s.29(2)(b)

M8 Source-1976 Sch.4 4(2)

M9 Source-1976 Sch.4 5A; 1978 Sch.3 5

M10 Source-1970 s.19(4)(a), (c); 1971 Sch.3 11

M11 1924 c. 27.

M12 Source-1970 s.19(3)(i)(ii)

M13 1982 c. xiv.

[F60 266A Life assurance premiums paid by employer U.K.

(1) This section applies if—

(a) pursuant to [F61 an employer-financed] retirement benefits scheme, the employer in any year of assessment pays a sum with a view to the provision of any relevant benefits for or in respect of any employee of that employer, and

(b) the payment is made under such an insurance or contract as is mentioned in section 266.

This section applies whether or not the accrual of the relevant benefits is dependent on any contingency.

(2) Relief, if not otherwise allowable, shall be given to that employee under section 266 in respect of the payment to the extent, if any, to which such relief would have been allowable to him if—

(a) the payment had been made by him, and

(b) the insurance or contract under which the payment is made had been made with him.

[F62 (3) For the purposes of subsection (1)(a) benefits are provided in respect of an employee if they are provided for the employee’s spouse, widow or widower, children, dependants or personal representatives.

(4) If a sum within subsection (1) is paid with a view to the provision of benefits for or in respect of more than one employee of the employer, part of it is to be treated as paid for or in respect of each of them.

(5) The amount treated as paid for or in respect of each employee is—

where—

A is the sum paid,

B is the amount which would have had to be paid to secure the benefits to be provided for or in respect of the employee in question, and

C is the total amount which would have had to be paid to secure the benefits to be provided for or in respect of all the employees if separate payments had been made in the case of each of them.

(6) This section does not apply if—

(a) in the year of assessment in which the sum is paid the earnings from the employee’s employment are (or, if there are none, would be if there were any) earnings charged on remittance, or

(b) the employee is not domiciled in the United Kingdom in the tax year in which the sum is paid and the conditions in subsection (7) are met.

(7) Those conditions are—

(a) that the employment is with a foreign employer, and

(b) that, on a claim made by the employee, the Board are satisfied that the pension scheme corresponds to a registered pension scheme.

(8) In subsection (6)(a) “earnings charged on remittance” means earnings which are taxable earnings under—

(a) section 22 of ITEPA 2003 (chargeable overseas earnings for year when employee resident and ordinarily resident, but not domiciled, in UK), or

(b) section 26 of that Act (foreign earnings for year when employee resident, but not ordinarily resident, in UK).

(9) In this section—

• “employer-financed retirement benefits scheme”, and

• “relevant benefits”,

• have the same meaning as in Chapter 2 of Part 6 of ITEPA 2003 (see sections 393A and 393B of that Act).]]

Textual Amendments

F60 S. 266A inserted (6.4.2003 with effect in accordance with s. 723(1) of the amending Act) by Income Tax (Earnings and Pensions) Act 2003 (c. 1), Sch. 6 para. 36 (with Sch. 7)

F61 Words in s. 266A(1) substituted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 10(2) (with Sch. 36)

F62 S. 266A(3)-(9) substituted for s. 266A(3)-(6) (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 10(3) (with Sch. 36)

267 Qualifying policies. U.K.

Schedule 15, Part I of which contains the basic rules for determining whether or not a policy is a qualifying policy, Part II of which makes provision for the certification etc. of policies as qualifying policies and Part III of which modifies Parts I and II in their application to certain policies issued by non-resident companies, shall have effect for the purpose of determining whether or not a policy is a qualifying policy; and, accordingly, any reference in this Act to a qualifying policy shall be construed in accordance with that Schedule.

268 Early conversion or surrender of life policies. U.K.

M14 (1) Where a policy of life insurance to which this section applies has been issued and, within four years from the making of the insurance in respect of which it was issued, any of the following events happens, that is to say—

(a) the surrender of the whole or part of the rights conferred by the policy;

(b) the falling due (otherwise than on death) of a sum payable in pursuance of a right conferred by the policy to participate in profits; and

(c) the conversion of the policy into a paid-up or partly paid-up policy;

the body by whom the policy was issued shall pay to the Board, out of the sums payable by reason of the surrender or, as the case may be, out of the sum falling due or out of the fund available to pay the sums which will be due on death or on the maturity of the policy, a sum determined in accordance with the following provisions of this section, unless the body is wound up and the event is a surrender or conversion effected in connection with the winding-up.

(2) The sum payable under subsection (1) above shall, subject to the following provisions of this section, be equal to the lower of the following, that is to say—

(a) the appropriate percentage of the premiums payable under the policy up to the happening of the event; and

(b) the surrender value of the policy at the time of the happening of the event less the complementary percentage of the premiums mentioned in paragraph (a) above.

(3) If the event is one of those mentioned below, the sum payable to the Board shall not exceed the following limit, that is to say—

(a) if it is the surrender of part of the rights conferred by the policy, the value of the rights surrendered at the time of the surrender;

(b) if it is the conversion of the policy into a partly paid-up policy, the surrender value at the time of the conversion, of so much of the policy as is paid up; and

(c) if it is the falling due of a sum, that sum.

(4) If the event was preceded by the happening of such an event as is mentioned in subsection (1) above, subsection (2) above shall apply—

(a) as if the lower of the amounts mentioned therein were reduced by the sum paid under this section in respect of the earlier event; and

(b) if the earlier event was such an event as is mentioned in paragraph (a) or (c) of subsection (3) above, as if the surrender value of the policy were increased by the amount which, under that paragraph, limited or might have limited the sum payable under this section in respect of the earlier event.

(5) For the purposes of this section the appropriate percentage, in relation to any event, is the percentage equal to the following fraction of the percentage found by doubling that mentioned in section 266(5)(a) as in force for the year of assessment in which the event happened, that is to say—

(a) if the event happens in the first two of the four years mentioned in subsection (1) above, three-sixths;

(b) if it happens in the third of those years, two-sixths; and

(c) if it happens in the last of those years, one-sixth;

and the complementary percentage, in relation to any event, is 100 per cent. less the appropriate percentage.

(6) Where the annual amount of the premiums payable under a policy of life insurance is at any time increased (whether under the policy or by any contract made after its issue) so as to exceed by more than 25 per cent.—

(a) if the insurance was made on or before 26th March 1974, the annual amount as at that date, or

(b) in the case of any other insurance, the first annual amount so payable,

the additional rights attributable to the excess shall be treated for the purposes of this section as conferred by a new policy issued in respect of an insurance made at that time, and the excess shall be treated as premiums payable under the new policy.

(7) This section applies to any policy of life insurance which is a qualifying policy unless—

(a) it is a policy in respect of the premiums on which relief under section 266 is not available by virtue of subsection (3)(c) of that section; or

(b) it is a policy of life insurance issued in connection with [F63 a registered pension scheme;]

and in relation to a policy of life insurance issued in respect of an insurance made before 27th March 1974 applies only in accordance with subsection (6) above.

Textual Amendments

F63 Words in s. 268(7)(b) substituted (6.4.2006) by Finance Act 2004 (c. 12), s. 284(1), Sch. 35 para. 11 (with Sch. 36)

Marginal Citations

M14 Source-1975 s.7; 1976 Sch.4 19(1); 1984 s.72(5)

269 Surrender etc. of policies after four years. U.K.

M15 (1) Where a policy of life insurance to which this section applies has been issued and, in the fifth or any later year from the making of the insurance in respect of which it was issued, either of the following events happens, that is to say—

(a) the surrender of the whole or part of the rights conferred by the policy; and

(b) the falling due (otherwise than on death or maturity) of a sum payable in pursuance of a right conferred by the policy to participate in profits;

then, if either of those events has happened before, the body by whom the policy was issued shall pay to the Board, out of the sums payable by reason of the surrender, or, as the case may be, out of the sum falling due, a sum determined in accordance with the following provisions of this section.

(2) The sum payable under subsection (1) above shall, subject to the following provisions of this section, be equal to the applicable percentage of the lower of the following—

(a) the total of the premiums which are payable in that year under the policy; and

(b) the sums payable by reason of the surrender or, as the case may be, the sum falling due;

and the percentage to be applied for this purpose shall be a percentage equal to that mentioned in section 266(5)(a) as in force for the year of assessment in which the event happens.

(3) Where, after a sum has become payable under subsection (1) above, and within the same year from the making of the insurance, another such event happens as is mentioned therein, the sums payable under that subsection in respect of both or all of the events shall not exceed the applicable percentage of the total mentioned in subsection (2)(a) above.

(4) Where, on the happening of an event in the fifth or any later year from the making of the insurance, any sum is payable under subsection (1) of section 268 as applied by subsection (6) of that section as well as under subsection (1) above, subsection (2) above shall apply as if the sums or sum mentioned in paragraph (b) thereof were reduced by the sum payable under that section.

(5) This section applies to any policy of life insurance which is a qualifying policy unless—

(a) it is a policy in respect of the premiums on which relief under section 266 is not available by virtue of subsection (3)(c) of that section; or

(b) it is a policy issued in the course of an industrial insurance business; or

(c) it was issued in respect of an insurance made before 27th March 1974.

Marginal Citations

M15 Source-1975 s.8; 1976 Sch.4 19(2); 1984 s.72(5)

270 Provisions supplementary to sections 268 and 269. U.K.

M16 (1) Where on the happening of an event in relation to a policy of life insurance a sum is payable under section 268 or 269, relief under section 266 in respect of the relevant premiums paid under the policy shall be reduced by the sum so payable or, as the case may be, by so much of the sum as does not exceed the amount of that relief (or as does not exceed so much of that amount as remains after any previous reduction under this section).

(2) For the purposes of this section the relevant premiums are—

(a) in relation to a sum payable under section 268, the premiums payable under the policy up to the happening of the event by reason of which the sum is payable; and

(b) in relation to a sum payable under section 269, the premiums payable in the year (from the making of the insurance) in which the event happens by reason of which the sum is payable.

(3) Where the relevant premiums are payable in more than one year of assessment the reduction in relief under this section shall, so far as possible, reduce relief for an earlier year of assessment before reducing relief for a later one.

(4) Any sum paid under section 268 or 269 by reason of any event shall be treated—

(a) as between the parties, as received by the person by whom the premiums under the policy were paid; and

(b) for the purposes of section 266, as a sum paid by that person in satisfaction of his liability resulting from the reduction of relief under this section;

and where that sum exceeds that liability he shall be entitled, on a claim made by him not later than [F64 4 years] after the end of the year of assessment in which the event happens, to repayment of the excess.

Textual Amendments

F64 Words in s. 270(4) substituted (1.4.2010, subject to art. 10(2) of the commencing S.I.) by Finance Act 2008 (c. 9), s. 118, Sch. 39 para. 21; S.I. 2009/403, art. 2(2)

Marginal Citations

M16 Source-1975 s.9(1)-(4); 1976 Sch.4 19(3)

271 Deemed surrender in cases of certain loans. U.K.

M17 (1) Where—

(a) [F65 by virtue of section 465 of ITTOIA 2005] a gain arising in connection with a policy F66 . . . would be treated as forming part of an individual’s total income; and

(b) the policy was issued in respect of an insurance made after 26th March 1974 F67 . . .; and

(c) any sum is at any time after the making of the insurance F66 . . . lent to or at the direction of that individual by or by arrangement with the body issuing the policy F68 . . .;

then, subject to subsection (2) below, the same results shall follow under sections 268 to 270 as if at the time the sum was lent there had been a surrender of part of the rights conferred by the policy F66 . . . and the sum had been paid as consideration for the surrender (and if the policy is a qualifying policy, whether or not the premiums under it are eligible for relief under section 266, those results shall follow under section 269, whether or not a gain would be treated as arising on the surrender).

(2) Subsection (1) above does not apply—

(a) in relation to a policy if—

(i) it is a qualifying policy; and

(ii) 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 used or to be used as his only or main residence; F69 . . .

F69 (b) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F65 Words in s. 271(1)(a) substituted (6.4.2005 with effect in accordance with s. 883(1) of the amending Act) by Income Tax (Trading and Other Income) Act 2005 (c. 5), Sch. 1 para. 123 (with Sch. 2)

F66 Words in s. 271(1) repealed (retrospectively) by Finance Act 1994 (c. 9), Sch. 17 para. 2(1)(a), Sch. 26 Pt. 5(22)

F67 Words in s. 271(1)(b) repealed (retrospectively) by Finance Act 1994 (c. 9), Sch. 17 para. 2(1)(b), Sch. 26 Pt. 5(22)

F68 Words in s. 271(1)(c) repealed (retrospectively) by Finance Act 1994 (c. 9), Sch. 17 para. 2(1)(c), Sch. 26 Pt. 5(22)

F69 S. 271(2)(b) and preceding word repealed (retrospectively) by Finance Act 1994 (c. 9), Sch. 17 para. 2(2), Sch. 26 Pt. 5(22)

Marginal Citations

M17 Source-1975 Sch.2 16(1), (3); 1976 s.35

272 Collection of sums payable under sections 268 and 269. U.K.

M18 (1) Any body by whom a policy to which section 268 or 269 applies has been issued shall, within 30 days of the end of each period of 12 months ending with 31st March in every year, make a return to the collector of the sums which, in that period, have become payable by it under either of those sections.

(2) Any sum which is to be included in a return made under subsection (1) above shall be due at the time by which the return is to be made and shall be paid without being demanded.

(3) Where any sum which was or ought to have been included in such a return is not paid by the end of the period for which the return was to be made, it may be recovered by an assessment as if it were income tax for the year of assessment in which that period ends; and where it appears to the inspector that a sum which ought to have been so included had not been included or that a return is not correct he may make such an assessment to the best of his judgment.

(4) All the provisions of the Income Tax Acts relating to the assessment and collection of tax, interest on unpaid tax, appeals and penalties shall, with the necessary modifications, apply in relation to sums due under this section; and for the purposes of those provisions so far as they relate to interest on unpaid tax, a sum assessed in pursuance of this section shall be treated as having been payable when it would have been payable had it been included in a return under subsection (1) above.

(5) Where, on an appeal against an assessment made in pursuance of this section, it is determined that a greater sum has been assessed than was payable, the excess, if paid, shall be repaid.

(6) Where a body has paid a sum which is payable under section 268 or 269 it shall give within 30 days to the person by whom the sum is, under section 270(4), treated as received a statement specifying that sum and showing how it has been arrived at.

(7) F70 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F70 S. 272(7) omitted (13.8.2009) by virtue of The Finance Act 2009, Schedule 47 (Consequential Amendments) Order 2009 (S.I. 2009/2035), art. 1, Sch. para. 17

Marginal Citations

M18 Source-1975 Sch.1

273 Payments securing annuities. U.K.

F71 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F71 S. 273 omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(h)

274 Limits on relief under [F72 section 266]. U.K.

(1) M19 The aggregate of the premiums F73 . . . in respect of which relief is given to any person under section 266 shall not exceed £1,500 in any year of assessment or one-sixth of that person’s total income, whichever is the greater.

(2) M20 The aggregate of the relief given under [F74 section 266] in respect of premiums F75 . . . payable for securing any benefits other than capital sums on death shall not exceed the amount of the income tax calculated at [F76 12.5%] on £100.

(3) F77 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

(4) M21 War insurance premiums shall not be taken into account in calculating the limits of one-sixth of total income or of £100 mentioned in this section.

In this subsection “war insurance premiums” means any additional premium F78 . . . paid in order to extend an existing life insurance policy to risks arising from war or war service abroad, and any part of any premium F78 . . . paid in respect of a life insurance policy covering those risks, or either of them, which [F79 is] attributable to those risks, or either of them.

Textual Amendments

F72 Word in s. 274 heading substituted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2009 (c. 10), Sch. 1 para. 4(6)

F73 Words in s. 274(1) omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 4(2)

F74 Words in s. 274(2) substituted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2009 (c. 10), Sch. 1 para. 4(3)(a)

F75 Words in s. 274(2) omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 4(3)(b)

F76 Words in s. 274(2) substituted (with effect in accordance with Sch. 1 para. 7 of the amending Act) by Finance Act 2009 (c. 10), Sch. 1 para. 4(3)(c)

F77 S. 274(3) omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 4(4)

F78 Words in s. 274(4) omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 4(5)

F79 Word in s. 274(4) substituted (with effect in accordance with s. 134(2) of the amending Act) by Finance Act 1996 (c. 8), Sch. 20 para. 20

Marginal Citations

M19 Source-1970 s.21(1); 1976 Sch.4 21

M20 Source-1970 s.21(3); 1975 Sch.2 6

M21 Source-1970 s.21(5)

Supplemental U.K.

F80 275 Meaning of “relative”. U.K.

. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F80 S. 275 repealed (1988-89 and subsequent years) by Finance Act 1988 (c. 39), s. 148, Sch. 14 Part IV

276 Effect on relief of charges on income. U.K.

F81 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F81 S. 276 repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 38, Sch. 3 Pt. 1 (with Sch. 2)

277 Partners. U.K.

F82 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F82 S. 277 repealed (6.4.2007 with effect in accordance with s. 1034(1) of the repealing Act) by Income Tax Act 2007 (c. 3), Sch. 1 para. 39, Sch. 3 Pt. 1 (with Sch. 2)

278 Non-residents. U.K.

F83 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Textual Amendments

F83 S. 278 omitted (with effect in accordance with Sch. 1 para. 7 of the repealing Act) by virtue of Finance Act 2009 (c. 10), Sch. 1 para. 2(i)