The Child Trust Funds Regulations 2004

Application of the provisions of Chapter 2 of Part 13 of the Taxes Act [F1 and of Chapter 9 of Part 4 of ITTOIA 2005] to policies U.K.

38.—(1) This paragraph applies to a case where—

(a) the event specified in regulation 12(11) has occurred in relation to a policy of life insurance, and

(b) a termination event within the meaning in regulation 12(12) occurs in relation to that policy.

(2) Where—

(a) there is a case to which paragraph (1) applies, and

(b) a chargeable event in relation to the policy, within the meaning given by section 540 of the Taxes Act, has occurred prior to the time at which the termination event mentioned in paragraph (1)(b) occurs,

the named child shall cease to be, and shall be treated as not having been, entitled to relief from tax under regulation 24(a)(v), in respect of gains treated as arising on the occurrence of any chargeable event mentioned in sub-paragraph (b).

(3) The provisions of Chapter 2 of Part 13 of the Taxes Act shall apply, in a case to which paragraph (1) applies, to—

(a) the termination event mentioned in paragraph (1)(b), and

(b) any chargeable event mentioned in paragraph (2)(b),

with the modifications provided for in paragraphs (4) to (8) of this regulation, and the registered contact and the account provider shall account to the Board in accordance with this regulation for tax from which relief under regulation 24 has been given on the basis that the named child was so entitled, or in circumstances such that the named child was not so entitled.

(4) A termination of a policy of insurance pursuant to regulation 12(9)(b)(ii) shall be treated as the surrender [F2 of all rights under the policy for the purposes of section 484(1)(a)(i) of ITTOIA 2005].

[F3 (5) Section 530 of ITTOIA 2005 does not apply to a gain in a case to which paragraph (1) applies.]

(6) Relief under section 550 of the Taxes Act shall be computed as if paragraph (5) had not been enacted.

(7) In section 552 of the Taxes Act—

(a) in subsection (1)(b) for “policy holder” substitute “ “named child ”;

(b) in subsection (3)—

(i) omit “(or, where the appropriate policy holder is a company, the corresponding financial year)”;

(ii) for “the name and address of the appropriate policy holder” substitute “ the name and address of the named child ”;

(iii) omit “and the corresponding financial year,”;

(c) in subsection (5)—

(i) for “the appropriate policy holder” substitute “ the named child ”;

(ii) omit sub-paragraph (b)(ii);

(iii) omit paragraph (c);

(iv) in paragraph (d) omit “except where paragraph (c) above applies,”;

(v) omit paragraph (f);

(d) in subsection (6)—

(i) omit paragraph (b);

(ii) for paragraph (c) substitute—

“(c) if the event is a death, the period of three months beginning with the receipt of written notification of the death;”;

(iii) after paragraph (c) insert—

“(d) if the event is—

(i) a termination event, or

(ii) a chargeable event preceding a termination event (as mentioned in regulation 38(2) of the Child Trust Funds Regulations 2004),

the period of three months beginning with the date on which the insurer received notice under regulation 37(6) of those Regulations or, if earlier, actual notice of the termination event.”;

(e) in subsection (7)—

(i) in paragraph (a) omit “, or, where the policy holder is a company, the financial year,”;

(ii) omit paragraph (b);

(iii) for paragraph (c) substitute—

“(c) if the event is a death, the period of three months beginning with the receipt of written notification of the death;”;

(iv) after paragraph (c) insert—

“(ca) if the event is—

(i) a termination event, or

(ii) a chargeable event preceding such a termination event (as mentioned in regulation 38(2) of the Child Trust Funds Regulations 2004,

the period of three months beginning with the date on which the insurer received notice under regulation 37(6) of those Regulations or, if earlier, actual notice of the termination event.”; and

(v) in paragraph (d) after “paragraph (c)” insert “ or (ca) ”;

(f) in subsection (8)—

(i) in paragraph (b) for “policy holder” substitute “ named child in respect ”;

(ii) in paragraph (c) omit the words from “or” to the end;

(g) in subsection (9) omit “or financial year” in each place where they occur;

(h) in subsection (10)—

(i) before the definition of “amount” insert—

““named child” has the same meaning as in the Child Trust Funds Regulations 2004;”;

(ii) omit the definitions of “appropriate policy holder” and “financial year”;

(iii) for the definition of “the relevant year of assessment” substitute—

““the relevant year of assessment”, in the case of any gain, means the year of assessment to which the gain is attributable;”; and

(iv) after the definition of “section 546 excess” insert—

““termination event” has the same meaning as in the Child Trust Funds Regulations 2004;”; and

(v) omit subsection (11).

(8) In section 552ZA of the Taxes Act—

(a) in subsection (2)(b) omit the words “or an assignment”; and

(b) omit subsections (3) and (4).

(9) The account provider shall account for and pay income tax at the [F4 basic] rate in force for the year in which the termination event, or the chargeable event mentioned in paragraph (2)(b) occurred, as the case may be, and any amount so payable—

(a) may be set off against any repayment in respect of tax due under regulation 26 or 27 and subject thereto,

(b) shall be treated as an amount of tax due not later than 6 months after the end of the year in which the event specified in regulation 12(11) came to the notice of the account provider, and

(c) shall be payable without the making of an assessment.

(10) Where tax is charged in accordance with paragraph (3)(a) or (b)—

(a) an assessment to income tax at the [F5 basic] rate in force for the relevant year may be made on the account provider or on the registered contact (on behalf of the named child), and

(b) an assessment to income tax at the higher rate within the meaning of [F6 section 10(3) of ITA 2007], for that year, may be made on the registered contact (on behalf of the named child) within five years after the 31st January next following that year, and regulation 29 shall not apply.

Textual Amendments

F1 Words in reg. 38 title inserted (6.4.2010) by The Child Trust Funds (Amendment) Regulations 2010 (S.I. 2010/582), regs. 1, 18(a)

F2 Words in reg. 38(4) substituted (6.4.2010) by The Child Trust Funds (Amendment) Regulations 2010 (S.I. 2010/582), regs. 1, 18(b)

F3 Reg. 38(5) substituted (6.4.2010) by The Child Trust Funds (Amendment) Regulations 2010 (S.I. 2010/582), regs. 1, 18(c)

F4 Word in reg. 38(9) substituted (6.4.2010) by The Child Trust Funds (Amendment) Regulations 2010 (S.I. 2010/582), regs. 1, 18(d)

F5 Word in reg. 38(10)(a) substituted (6.4.2010) by The Child Trust Funds (Amendment) Regulations 2010 (S.I. 2010/582), regs. 1, 18(d)

F6 Words in reg. 38(10)(b) substituted (6.4.2010) by The Child Trust Funds (Amendment) Regulations 2010 (S.I. 2010/582), regs. 1, 18(e)