Finance Act, 1994

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Life assurance and companies.

58.— Part IV of the Capital Gains Tax Act, 1975 , is hereby amended by the insertion after section 20A (inserted by section 24 of the Finance Act, 1993 ) of the following section:

“20B.—(1) (a) In this section—

‘relevant policy’ means a policy of life assurance, or contract for a deferred annuity on the life of any person, entered into or acquired by a company on or after the 11th day of April, 1994, which is not a policy to which subsection (2) of section 20A (as inserted by section 24 of the Finance Act, 1993 ) applies;

‘relevant disposal’ means a disposal of, or an interest in, the rights under any relevant policy, other than—

(i) a disposal by a person who is not the original beneficial owner of those rights and who acquired them, or an interest in them, for a consideration in money or money's worth, or

(ii) a disposal resulting directly from the death, disablement or disease of a person, or one of a class of persons, specified in the terms of the policy;

‘relevant gain’ means a chargeable gain arising on a relevant disposal.

(b) (i) For the purposes of this section, a policy of assurance, or contract for a deferred annuity on the life of any person, entered into by a company before the 11th day of April, 1994, shall be treated as a policy or contract, as the case may be, entered into on or after that date if there is a variation of the policy or contract on or after that date which directly or indirectly increases the benefits secured by, or extends the term of, the policy or contract, as the case may be.

(ii) For the purposes of subparagraph (i), if a policy or contract entered into by a company before the 11th day of April, 1994, provides an option to have another policy or contract substituted for it or to have any of its terms changed, then any change in the terms of the policy or contract which is made in pursuance of the option shall be deemed to be a variation of the policy or contract, as the case may be.

(c) Subject to subsection (2), this section shall be construed together with subsections (3) and (4) of section 20, as if the said subsection (3) were not subject to subsection (2) of section 20.

(2) Section 20 (2) shall not have effect in respect of any relevant disposal.

(3) (a) For the purposes of the Corporation Tax Acts (within the meaning of section 155 of the Corporation Tax Act, 1976 )—

(i) any relevant gain arising to a company shall be treated as if it were the net amount of a gain from the gross amount of which corporation tax has been deducted at the standard rate (within the meaning of section 1 of the Income Tax Act, 1967 ) of income tax,

(ii) the amount to be brought into account in respect of the relevant gain in computing, in accordance with section 13 of the Corporation Tax Act, 1976 , the company's chargeable gains, for the accounting period in which the relevant gain arises, shall be the said gross amount, and

(iii) the corporation tax treated as deducted from that gross amount shall—

(I) be set off against the corporation tax assessable on the company for the said accounting period, or

(II) in so far as it cannot be set off in accordance with clause (I), be repaid to the company:

Provided that this paragraph shall be ignored for the purposes of section 12 (1) of this Act.

(b) This subsection shall be construed together with the Corporation Tax Act, 1976 .

(4) For the purposes of this section, a contract, being a policy of life assurance or a contract for a deferred annuity on the life of any person, shall be treated as having been entered into by a company before the 11th day of April, 1994, if—

(a) (i) a document referable to the contract was served on the company in pursuance of section 52 of the Insurance Act, 1989 , before the 11th day of April, 1994, and

(ii) the company entered into the contract on or before the 22nd day of April, 1994,

or

(b) (i) the contract was entered into before the 30th day of June, 1994, by the company,

(ii) before the 11th day of April, 1994—

(I) there was in existence a binding agreement in writing under which the company was obliged to acquire land, and

(II) preliminary commitments or agreements had been entered into by the company—

(A) to obtain a loan, which was to be secured on the land, to defray money applied in acquiring the land, and

(B) to enter into the contract primarily for the purpose of repaying the loan, and

(iii) the agreement under which the loan was advanced obliges the company to apply any payment made to it under the contract to the repayment of the loan before any other application by it of such payment.”.