Income Tax (Trading and Other Income) Act 2005 section 111

Certain pre-17th March 1998 policies not foreign policies of life insurance

Section 111 restricts when a life insurance policy issued before 17th March 1998 can be treated as a foreign policy of life insurance for tax purposes, and explains the circumstances in which such a policy loses its pre-1998 status.

• A life insurance policy issued before 17th March 1998 only counts as a "foreign policy of life insurance" if it falls within the specific definition in section 476(3)(a) and is not excluded by the separate rule for certain pre-18th November 1983 policies.
• If such a policy is varied on or after 17th March 1998 to increase the benefits secured or to extend the term of the insurance, it is treated as though it had been issued on or after that date, bringing it within the full modern rules.
• Any exercise of rights conferred by the policy counts as a variation for these purposes, so even using existing policy options could trigger the change in treatment.
• The provision creates a narrower gateway for older policies to be classified as foreign policies, protecting policyholders who have not altered their pre-1998 arrangements from the broader definition that applies to newer policies.