Income Tax (Trading and Other Income) Act 2005 section 495

Disregard of certain amounts in calculating gains under section 491

Section 495 sets out certain amounts that must be excluded when calculating gains on life insurance policies, specifically when working out the total benefit value and total allowable deductions.

• When a qualifying policy is replaced by another and the two are treated as a single policy, the value of the old policy used as a premium for the new one is ignored in both the total benefit value and total allowable deductions calculations.
• Any sum paid or benefit provided under a policy that is attributable to a person's disability is excluded from the total benefit value calculation.
• An assignment of a share in a policy is ignored if it took place in an insurance year beginning on or after 6 April 2001 and was not made for money or money's worth (for example, a gift).
• The disability disregard applies not only to the policy in question but also to any related policy.