Section 172 — Finance Act 2003: Charges under life insurance policies for exceptional risk of disability

Charges under life insurance policies for exceptional risk of disability 172 1 In Schedule 15 to the Taxes Act 1988 (provisions for determining whether an insurance policy is a “qualifying policy”)—

a in paragraph 12(a) (disregard of so much of premium as is charged on the grounds of exceptional risk of death),

and b in paragraph 12(b) (disregard of provision in policy charging, on those grounds, a sum as a debt against capital sum guaranteed on death), after “death” insert “ or disability ” .

2 Accordingly, in the heading before paragraph 12 of that Schedule, for “mortality risk” substitute “ risk of death or disability ” .

3 In paragraph 3 of that Schedule (friendly society policies), omit paragraphs (b)(iii) and (c) of sub-paragraph (8) (which make provision corresponding to paragraph 12(a) and (b) but are unnecessary).

4 In paragraph 18 of that Schedule (rules about substituted policies applied where policies are varied) insert after sub-paragraph (3)— 4 For the purposes of this paragraph there is no variation in the terms of a policy where—

a an amount of premium chargeable on the grounds that an exceptional risk of death or disability is involved becomes or ceases to be payable, or b the policy is amended by the insertion, variation or removal of a provision under which, on those grounds, any sum may become chargeable as a debt against the capital sum guaranteed by the policy on death or disability. .

5 In section 460 of that Act (registered friendly societies: exemption from tax in respect of life or endowment business), in subsection (3)(b) (which makes provision corresponding to paragraph 12(a) of Schedule 15) after “death” insert “ or disability ” .

6 The amendments made by this section shall be deemed always to have had effect; but this section shall be disregarded to the extent that it would prevent a policy from being a qualifying policy at any time before 9th April 2003.