Income Tax (Trading and Other Income) Act 2005 Schedule 2 paragraph 109

Contracts in accounting periods beginning before 1st January 1992: disapplication of sections 530 and 539(3)

Paragraph 109 provides transitional rules for certain older life annuity contracts, disapplying the normal income tax credit and deficiency relief provisions that would otherwise apply under sections 530 and 539.

• Applies to life annuity contracts made after 26th March 1974 but falling within an accounting period of the insurer beginning before 1st January 1992
• Gains from these contracts do not carry an income tax credit under section 530, except for the purpose of calculating top slicing relief under section 535
• This disapplication is overridden where relief applies for EEA insurer contracts (section 532) or where foreign tax is chargeable (section 534)
• Deficiency relief under section 539 is simplified so that a deficiency is deductible from net income if the individual would have been taxable on a gain, whether or not UK resident