Income Tax (Trading and Other Income) Act 2005 section 522

Method for making annual calculations under section 515

Section 522 sets out the method for performing the annual calculation required by section 515 to determine whether a gain has arisen on a personal portfolio bond at the end of an insurance year, and if so, the amount of that gain.

• A gain arises if total premiums paid (PP) plus total personal portfolio bond excesses (TPE) exceed total part surrender gains (TSG) at the end of the insurance year
• The gain is equal to 15% of the amount by which PP plus TPE exceeds TSG
• All insurance years of the policy or contract are included in the calculation, even years in which the policy was not a personal portfolio bond
• Premiums, previous gains and excess events from any insurance year of the policy or contract are relevant, not just years in which it qualified as a personal portfolio bond