PART II EXEMPT TRANSFERS
CHAPTER I GENERAL
21 Normal expenditure out of income.
1
A transfer of value is an exempt transfer if, or to the extent that, it is shown—
a
that it was made as part of the normal expenditure of the transferor, and
b
that (taking one year with another) it was made out of his income, and
c
that, after allowing for all transfers of value forming part of his normal expenditure, the transferor was left with sufficient income to maintain his usual standard of living.
2
A payment of a premium on a policy of insurance on the transferor’s life, or a gift of money or money’s worth applied, directly or indirectly, in payment of such a premium, shall not for the purposes of this section be regarded as part of his normal expenditure if, when the insurance was made or at any earlier or later time, an annuity was purchased on his life, unless it is shown that—
a
the purchase of the annuity, and
b
the making or any variation of the insurance or of any prior insurance for which the first-mentioned insurance was directly or indirectly substituted,
were not associated operations.
3
4
Subsection (3) above shall not apply to annuities purchased before 13th November 1974.
5
Section 3(4) above shall not apply for the purposes of this section.