Income Tax (Trading and Other Income) Act 2005 section 503

Exception from section 501 for certain loans under qualifying policies

Section 503 provides an exception from the rules treating policy loans as part surrenders, where the loan meets certain conditions relating to commercial interest rates or employee housing loans made before 6 April 2000.

• Loans made by the insurer under a qualifying policy are exempt from the part surrender rules in section 501 if one or both of two conditions are satisfied.
• Condition A is met where interest is payable on the loan at a commercial rate.
• Condition B is met where the loan was made before 6 April 2000 to a full-time employee of the insurer to help them buy or improve a property used as their only or main residence.
• Only one of the two conditions needs to be satisfied for the exemption to apply, though both may be met.