Income Tax (Trading and Other Income) Act 2005 section 473A

Connected policies or contracts treated as single policy or contract

Section 473A provides that where life insurance policies or capital redemption contracts are connected with each other, they must be treated as a single policy or contract when calculating chargeable event gains.

• Policies or contracts that are connected with each other are treated as a single policy or contract for the purposes of the chargeable event gain rules.
• Two policies or contracts are connected if they are simultaneously in force at any time and one was issued with reference to the other or to enable the other to be issued on particular terms.
• The connection also requires that the terms of either policy or contract are significantly more or less favourable than would reasonably be expected if the related policy or contract did not exist.
• Where a policy ("A") is connected to two or more other policies that are not themselves directly connected to each other, all of those policies are nevertheless treated as connected with each other through their link to "A".