Income Tax (Trading and Other Income) Act 2005 section 112

Pre-17th March 1998 policy or contract: UK resident trustees

Section 112 provides an exemption from the UK resident trustee liability rules for gains on certain life insurance policies, life annuity contracts and capital redemption policies that predate 17th March 1998, where the trust was also created before that date by an individual who died before that date.

• UK resident trustees are not liable under section 467 on gains from pre-17th March 1998 policies or contracts if the trust was created before that date and at least one individual settlor died before that date
• A "1998 Act excluded policy or contract" covers life insurance policies issued on insurances made before 17th March 1998, life annuity contracts made before that date, and capital redemption policies with contracts made before that date
• The exclusion is lost if the policy or contract has been varied on or after 17th March 1998 to increase benefits or extend the term, and any exercise of rights under the policy counts as a variation
• When determining whether a settlor died before 17th March 1998, the rule in section 472(1) that treats trusts created by two or more persons as separate trusts is disregarded

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