Income Tax (Trading and Other Income) Act 2005 section 463E

Transitional protection for policies issued in respect of insurances made on or after 21 March 2012 but before 6 April 2013

Section 463E provides transitional relief to reduce the taxable gain on certain life insurance policies that were issued between 21 March 2012 and 5 April 2013, where a later variation causes the policy to lose its qualifying status.

• This section applies to policies issued between 21 March 2012 and 5 April 2013 that were qualifying policies (but not restricted relief qualifying policies) at the time of issue, and which subsequently lost qualifying status due to a variation made on or after 6 April 2013
• The taxable gain is reduced using the formula G × TPV / TP, where G is the full gain, TPV is total premiums payable before the variation, and TP is total premiums payable before the chargeable event
• Where the non-UK residence relief under section 528 also applies, the section 463E reduction is calculated first, and the section 528 reduction is then applied to the already-reduced gain
• The rules in section 463A(10) to (12) regarding how premiums are calculated also apply when working out the reduction under this section