Income Tax (Trading and Other Income) Act 2005 sections 87–88

Gains from contracts for life insurance etc: rights partially assigned

Sections 87–88 provide transitional rules for the treatment of partial assignments of rights under life insurance policies or contracts that occurred in insurance years beginning on or before 5 April 2001.

• The co-ownership assignment rules in section 505 do not apply to transactions in insurance years beginning on or before 5 April 2001 that would otherwise be treated as partial assignments under the periodic or transaction-related calculation methods.
• Where a calculation under section 507 (periodic) or section 511 (transaction-related) must account for a partial assignment made for value in a pre-April 2001 insurance year, a modified valuation approach applies.
• The valuation rule in section 508 is adapted so that references to "surrendered" and "surrender" also cover "assigned" and "assignment", ensuring the same valuation method applies to both types of transaction for the relevant period.
• The modification also disapplies subsection (4) of section 508, removing a restriction that would otherwise limit how the valuation is carried out for these older partial assignments.

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