Income Tax (Trading and Other Income) Act 2005 section 531

Exceptions to section 530

Section 531 removes the income tax credit normally given under section 530 for certain policies and contracts where the insurer has not paid UK tax on the underlying investment profits.

• The income tax credit under section 530 is denied for specified policies and contracts where the underlying investment profit has not been subject to UK tax, meaning the policyholder bears the full tax charge including the starting rate where applicable.
• The affected policies include friendly society exempt BLAGAB or eligible PHI business policies, foreign life insurance policies not meeting certain qualifying conditions, protection business contracts, life annuity contracts outside the UK corporation tax net, and foreign capital redemption policies.
• Despite the denial of the credit, the section is disregarded when calculating top slicing relief under section 535, so that calculation proceeds as though the credit were available.
• The credit may still be available where the policy or contract is with a European Economic Area insurer or another non-UK insurer subject to comparable tax, or where a foreign life policy is issued through a UK permanent establishment of a non-UK insurer.