Income Tax (Trading and Other Income) Act 2005 section 86

Gains from contracts for life insurance etc: exclusion of pension policies

Section 86 provides transitional rules that applied before 6 April 2006, ensuring that the tax rules on gains from life insurance contracts did not apply to certain pension-related insurance policies, and gave the Treasury power to make consequential amendments when the new pension tax regime took effect.

• Before 6 April 2006, the rules taxing gains from life insurance contracts (Chapter 9 of Part 4) did not apply to pension policies, including life insurance policies connected with approved occupational or personal pension schemes, and insurance contracts approved to provide for surviving spouses, civil partners and dependants.
• A "pension policy" was defined as a life insurance policy issued in connection with an approved occupational pension scheme, an insurance policy approved to provide for surviving spouses, civil partners and dependants, or a life insurance policy held in connection with an approved personal pension scheme.
• The Treasury was given power under Finance Act 2004 to make orders substituting the updated version of section 479 (exclusion of pension policies) once the new pension tax regime came into force on 6 April 2006.
• The Treasury's order-making power also extended to replacing the term "sponsored superannuation" with "non-registered occupational pension" in section 486, reflecting updated pension terminology under the new regime.