Section 46A | Contract of life insurance entered into before 22nd March 2006 which on that day is settled property in which interest in possession subsists ^F1

(1)Subsections (2) and (4) below apply where—^F1

(a)a settlement commenced before 22nd March 2006,^F1

(b)a contract of life insurance was entered into before that day,^F1

(c)a premium payable under the contract is paid, or an allowed variation is made to the contract, at a particular time on or after that day,^F1

(d)immediately before that day, and at all subsequent times up to the particular time, there were rights under the contract that—^F1

(i)were comprised in the settlement, and^F1

(ii)were settled property in which a transitionally-protected interest (whether or not the same such interest throughout that period) subsisted,^F1

(e)rights under the contract become, by reference to payment of the premium or as a result of the variation,—^F1

(i)comprised in the settlement, and^F1

(ii)part of the settled property in which the then-current transitionally-protected interest subsists, and^F1

(f)any variation of the contract on or after 22nd March 2006 but before the particular time, so far as it is a variation that—^F1

(i)increased the benefits secured by the contract, or^F1

(ii)extended the term of the insurance provided by the contract,^F1

was an allowed variation.

(2)For the purposes of the provisions mentioned in subsection (3) below—^F1

(a)the rights mentioned in subsection (1)(e) above shall be taken to have become comprised in the settlement, and^F1

(b)the person beneficially entitled to the then-current transitionally-protected interest shall be taken to have become beneficially entitled to his interest in possession so far as it subsists in those rights,^F1

before 22nd March 2006.

(3)Those provisions are—^F1

section 3A(2) above;

section 5(1A) above;

section 49(1A) and (1B) below;

section 51(1A) and (1B) below;

section 52(2A) and (3A) below;

section 53(1A) and (2A) below;

section 54(2A) and (2B) below;

section 54A(1A) below;

section 57A(1A) below;

section 58(1B) and (1C) below;

section 59(1) and (2) below;

section 80(4) below;

section 100(1A) below;

section 101(1A) below;

section 102ZA(1) of the Finance Act 1986 (gifts with reservation); and

sections 72(1A) and (2A) and 73(2A) of the 1992 Act.

(4)If payment of the premium is a transfer of value made by an individual, that transfer of value is a potentially exempt transfer.^F1

(5)In this section—^F1

“allowed variation”, in relation to a contract, means a variation that takes place by operation of, or as a result of exercise of rights conferred by, provisions forming part of the contract immediately before 22nd March 2006;

“transitionally-protected interest” means—

(a)an interest in possession to which a person was beneficially entitled immediately before, and on, 22nd March 2006, or

(b)a transitional serial interest.