Income Tax (Trading and Other Income) Act 2005 section 545

Minor definitions

Section 545 provides a set of minor definitions used throughout the chapter dealing with gains from life insurance policies, capital redemption policies and related contracts, and clarifies how premiums and their amounts should be understood.

• Key terms such as "contract of insurance", "friendly society", "insurance company", "market value", "non-charitable trust" and "policy" are each given specific defined meanings for the purposes of this chapter.
• A "premium" is not limited to a straightforward cash payment — it also includes any lump sum consideration or non-cash property transferred to an insurance company in place of a premium.
• When the chapter refers to the "amount of premiums paid", this includes both the cash value of any lump sum premium and the market value, at the date of transfer, of any non-cash property handed over as a premium.
• Market value for these purposes is determined using the general valuation rules in sections 272 and 273 of the Taxation of Chargeable Gains Act 1992.