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IPTM3640 | Personal portfolio bonds: meaning: property selection: ITTOIA05/S517(2)

From HM Revenue & Customs · Insurance Policyholder Taxation Manual

A policy or contract is not a personal portfolio bond (PPB) merely because its terms permit the selection of property as described at IPTM3610 if all of the property which may be selected:

  1. property appropriated by the insurer to an internal linked fund (IPTM7740)

  2. units in an authorised unit trust, see ( IFM02120)

  3. shares in an investment trust, see (IFM14120) onwards, or an overseas equivalent (IPTM7750)

  4. shares in an open-ended investment company, see ( IFM02130)

  5. cash (IPTM7755)

  6. a life policy, life annuity or capital redemption policy, unless excluded (see below)

  7. specified interests in collective investment schemes (see below)

  8. shares in a UK Real Estate Investment Trust (REIT) or an overseas equivalent (IFM22016)

  9. an interest in an authorised contractual scheme, and

  • meets either the general or class property selection conditions (ITTOIA05/S521):

general condition: property meets this condition if, at the time when it may be selected, the opportunity to select property falling within the same category is available to:

- all policyholders of the insurer, or

- persons acting on behalf of those policyholders

class condition: property meets this condition if, at the time when it may be selected, the opportunity to select property falling within the same category is available to:

- a particular class or classes of policyholders of the insurer

- persons acting on behalf of the members of that class or those classes.

The meaning of class for this purpose is given at IPTM3630.

Excluded Policies

A life policy, life annuity or capital redemption policy is ‘excluded’ if:

  • the policy or contract is itself a PPB

  • the value of any benefits under the policy or contract is determinable directly or indirectly by reference to a PPB

  • a PPB is property related to the policy or contract.

Cash

Cash includes sums in bank or building society accounts, but not cash that is acquired in order to realise a gain on its disposal.

Specified interests in collective investment schemes

An interest in collective investment schemes are units in non-UK unit trusts or any other arrangement that creates rights in the nature of co-ownership under the law of a territory outside the UK. More information can be found in IPTM7745.

More detailed guidance, aimed largely at insurers and practitioners, is given at IPTM7700 onwards.