Income Tax (Trading and Other Income) Act 2005 section 466

Person liable: personal representatives

Section 466 determines when personal representatives of a deceased person's estate are directly liable for income tax on gains from life insurance policies or capital redemption contracts they hold, and what happens when they are not.

• Personal representatives are liable for tax on gains from policies or contracts they hold, provided certain conditions about the underlying tax treatment of the policy are met
• The key condition is whether the basic rate tax credit normally available to individuals under section 530 would be disapplied — broadly, this happens where the insurer has not been taxed on the investment profits underlying the policy
• Where the condition is met, the gain is treated as the personal representatives' own income for income tax purposes and they are directly responsible for paying the tax
• Where the condition is not met, the gain is not taxed on the personal representatives under this chapter but instead forms part of the aggregate income of the deceased's estate, taxed under separate rules for estates in administration