Income Tax (Trading and Other Income) Act 2005 section 110

Certain pre-17th March 1998 policies: application of section 529(1)

Section 110 deals with how certain exceptions to the tax charge on gains from life insurance policies and capital redemption policies apply where the policies were issued before 17th March 1998 and were held by a foreign institution on that date.

• This provision applies to foreign life insurance policies where the underlying insurance was made before 17th March 1998, and to foreign capital redemption policies where the underlying contract was made before that date.
• Normally, section 529(1)(c) provides an exception from the tax charge under section 528 where a policy is or was held by a foreign institution at any point during the policy period or when a chargeable event occurs.
• However, this foreign institution exception does not apply if the policy was already held by a foreign institution on 16th March 1998 — meaning such policies remain within the scope of the tax charge under section 528.
• The practical effect is that pre-17th March 1998 policies held by foreign institutions on 16th March 1998 cannot benefit from the foreign institution exemption, preserving the original tax treatment that applied before the legislative change.