Finance Act 2007

Life assurance premium contributions

3 After section 195 insert—

“195A Life assurance premium contributions

(1) Contributions paid by or on behalf of an individual under a registered pension scheme are life assurance premium contributions for the purposes of section 188(3)(aa) if—

(a) rights under a non-group life policy (see subsection (2)) are (or later become) held for the purposes of the pension scheme, and

(b) the contributions are treated by this section as paid in respect of premiums under the non-group life policy (see subsections (3) to (5)).

(2) For the purposes of this section a “non-group life policy” is a policy of insurance under which the only benefits which may become payable are benefits payable in consequence, or in anticipation, of—

(a) the death of the individual or one of a group of individuals which includes the individual, or

(b) the deaths of more than one of a group of individuals—

(i) which includes the individual, and

(ii) the other members of which are connected with the individual.

(3) Contributions paid by or on behalf of the individual under the pension scheme are treated as paid in respect of premiums under the non-group life policy if—

(a) the payment of the contributions constitutes the payment of premiums under the policy, or

(b) the person by whom the contributions are paid intends the contributions (or an amount equivalent to them) to be applied towards paying premiums under the policy.

(4) Where the amount of the premiums under the policy in a tax year exceeds the amount of any contributions treated as paid in respect of the premiums by subsection (3), other contributions paid by or on behalf of the individual under the pension scheme in the tax year are treated as paid in respect of premiums under the policy to the extent that their amount does not exceed the difference between the amount of the premiums and the amount of any contributions treated as paid in respect of the premiums by subsection (3).

(5) But where—

(a) the benefits under the policy relate to the death of one or more of a group of individuals, and

(b) contributions are also paid under the pension scheme in the tax year by or on behalf of another member or other members of the group,

the amount of the contributions paid by or on behalf of the individual which are treated as paid in respect of premiums under the policy by subsection (4) does not exceed what is just and reasonable having regard to the operation of section 188(3)(aa) in relation to the contributions paid by or on behalf of another member or other members of the group.

(6) The Commissioners for Her Majesty’s Revenue and Customs may by regulations amend subsections (2) to (5).

(7) Regulations under subsection (6) which limit—

(a) the policies of insurance which are non-group life assurance policies for the purposes of this section, or

(b) the contributions which are treated by this section as paid in respect of premiums under such policies,

may be made so as to have effect in relation to times before they are made.

(8) For the purposes of this section an individual (“A”) is connected with another individual (“B”) if—

(a) A is B’s spouse or civil partner,

(b) A is a relative of B,

(c) A is the spouse or civil partner of a relative of B,

(d) A is a relative of B’s spouse or civil partner, or

(e) A is the spouse or civil partner of a relative of B’s spouse or civil partner;

and for the purposes of this subsection “relative” means brother, sister, ancestor or lineal descendant.”