SolvedIPTM3620 | Personal portfolio bonds: meaning: bonds made before 17 March 1998
From HM Revenue & Customs · Insurance Policyholder Taxation Manual
The conditions for a policy or contract to be a personal portfolio (PPB) bond are slightly narrower than those in IPTM3610 where a policy or contract
was made before 17 March 1998 and
has not been varied on or after 16 July 1998 to increase the policy benefits or extend the term.
General Rule
In these cases, the policy or contract is not a PPB if any of the benefits under the policy or contract have not at any time since 6 April 1994 been capable of being determined by reference to:
shares or securities listed on a recognised stock exchange, or
shares or securities of a company dealt in on the Unlisted Securities Market or the Alternative Investment Market, unless
- the whole or any part of the benefits under the policy or contract may be determined by reference to shares or securities of the company that represent more than 10 per cent of its issued share capital, or
- the amount invested in the company exceeds 10 per cent of the total amount of premiums paid up to that time on the policy or contract.
Transitional Rules
Where a policy or contract fails the conditions of the general rule, it will not be considered a PPB if:
no benefits since 6 April 1994 were determined by reference to the property or indices listed in the general rule, even though under the policy or contract it was possible to determine benefits in this way, and
the terms of the policy or contract were varied before the end of the first insurance year which began on or after 6 April 1999 so that the benefits could only be determined by reference to the property and indices listed in the general rule.
The time limit for varying the terms of the contract given in the second condition is extended if the policyholder has become UK resident after 17 March 1998. If, on arrival in the UK, the policyholder did not then intend to become UK resident, or to remain in the UK for at least two years, the holder is given until the end of the insurance year in which UK residence was established to vary the bond as described.
The date of arrival in the UK is substituted as the reference date for determining the insurance year if the holder intended to establish UK residence on arrival. No annual PPB charge is made in these circumstances for any insurance year before that in which the variation was made. More details at IPTM7815.