Part 4Savings and investment income

C1C3C2Chapter 9Gains from contracts for life insurance etc.

Annotations:
Modifications etc. (not altering text)
C1

Pt. 4 Ch. 9 applied (with modifications) by The Individual Savings Account Regulations 1998 (S.I. 1998/1870), reg. 36 (as added by S.I. 1998/3174, reg. 12 and as amended (6.4.2008) by S.I. 2008/704, regs. 1, 17(4))

C3

Pt. 4 Ch. 9 applied (with modifications) by The Child Trust Funds Regulations 2004 (S.I. 2004/1450), reg. 38 (as amended (6.4.2010) by S.I. 2010/582, regs. 1, 18)

C2

Pt. 4 Ch. 9: power to exclude conferred (with effect in accordance with s. 148 of the amending Act) by Finance Act 2012 (c. 14), s. 61(4) (with s. 147, Sch. 17)

Calculating gains: general

494The total allowable deductions for a policy or contract

1

To calculate the total allowable deductions for a policy or contract for the purposes of section 491—

Step 1

Add together—

a

 the total amount of premiums paid under the policy or contract before the event, and

b

 if the event occurs at the end of the final insurance year (see section 499), the amount of any repayment or partial repayment of a loan treated under section 500(c) as a surrender of a part of the rights under the policy or contract.

Step 2

In the case of a contract for a life annuity under which any annuity payments have been made, reduce the result of step 1 by so much of those payments as is—

a

 exempt under section 717 (exemption for part of purchased life annuity payments), or

b

 determined to be the capital element in those payments under section 658 of ICTA.

2

In the case of a capital redemption policy which has been assigned for money or money's worth before the event, the reference in paragraph (a) of step 1 in subsection (1) to the total amount of premiums paid under the policy or contract before the event is a reference to the total of—

a

the amount or value of the consideration given for the last such assignment, and

b

the total amount of premiums paid under the policy or contract after that assignment and before the event.

3

References to the policy in paragraphs (a) and (b) of step 1 in subsection (1) and in subsection (2) include any related policy.

4

Subsection (1) is subject to—

  • section 495 (disregard of certain amounts in calculating gains under section 491), and

  • section 496 (modification of this section: qualifying endowment policies held as security for company debts).