Income Tax (Trading and Other Income) Act 2005 section 102

Certain pre-26th June 1982 policies and contracts excluded from Chapter 9 of Part 4

Section 102 explains when older life insurance policies and life annuity contracts — those originating before 26th June 1982 and assigned for value before that date — are excluded from the tax rules on gains from life insurance policies, and the circumstances that can bring them back within those rules.

• Life insurance policies issued before 26th June 1982, or life annuity contracts made before that date, whose rights were assigned for money or money's worth before that date and are no longer held by the original beneficial owner, are generally outside the scope of the gains charge in Chapter 9 of Part 4
• These policies or contracts are brought back within the gains charge if, after 23rd August 1982, any of three conditions is met: the rights are reassigned for value (condition A), a premium is paid (condition B), or a loan is made by or arranged through the insurer to or at the direction of a connected individual (condition C)
• Condition C does not apply to qualifying policies where the loan carries a commercial rate of interest, or where the loan is to a full-time employee of the insurer for purchasing or improving their only or main residence; and condition C is disregarded entirely for policies or contracts originating before 27th March 1974
• Where a loan triggers condition C, it is treated for the purposes of the part surrender rules as having been made at a time when the gains charge does apply, ensuring the loan is taxed as a part surrender of the policy or contract

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