The Personal Portfolio Bonds (Tax) Regulations 1999

Personal portfolio bonds—computation of gain

5.—(1) This regulation makes provision for amounts to be treated as gains arising in connection with a personal portfolio bond in any year ending on or after 6th April 2000 other than the final year (a “relevant year”) for the purposes of charging those gains to tax in accordance with the provisions of Chapter II of Part XIII of the Taxes Act applied (with modifications) by regulation 6.

(2) Subject to paragraph (5), there shall be treated as a gain arising in a relevant year the amount calculated in accordance with the formula–

where–

• A is the amount of the premium paid in respect of the personal portfolio bond,

• B is the aggregate of the amounts found by applying that formula at the end of each of the previous years during which the personal portfolio bond was in existence, in succession, starting with the first such year, subject to paragraph (4), and

• C is, on the assumption that the words “or assignment” and “assigned or” in section 546(1)(a) were omitted, the aggregate of–

  (a)

  any excess of the reckonable aggregate value mentioned in subsection (2) of section 546 over the allowable aggregate amount mentioned in subsection (3) of that section, which, in relation to the personal portfolio bond, has occurred at the end of the year immediately preceding the relevant year; and

  (b)

  any such excess which occurred at a time earlier than any excess mentioned in sub-paragraph (a) would have occurred.

(3) The gain calculated in accordance with paragraph (2) shall be treated as arising at the end of the relevant year concerned, subject to paragraph (4).

(4) The references–

(a) in paragraph (3) to the end of a relevant year, and

(b) in paragraph (2), in the definition of “B”, to the end of any previous year,

shall each be construed as a reference to the time immediately before any gain treated as arising in connection with the same policy or contract at the end of that year under section 541(1), 543 or 545, on the occurrence of such an excess as is mentioned in section 540(1)(a)(v), 542(1)(c) or 545(1)(d).

(5) Where the terms of a policy or contract, to which regulation 3(3) applies as modified by regulation 3(5), are varied, within the alternative period permitted by regulation 3(5), (that is, the first year which commences after the time mentioned in regulation 3(5)(b) falls later than the year mentioned in regulation 3(3)(b)), no gain shall be treated as arising under paragraph (2) at the end of the first year, in relation to the policy or contract, which ends after the time mentioned in regulation 3(5)(b).

(1)

Sections 540 and 541 were amended by paragraphs 3 and 4 of Schedule 9 to the Finance Act 1989 (c. 26).