Section 528A | Reduction in amount charged on basis of non-UK residence of deceased person

(1)Subsection (3) applies if—

(a)personal representatives are liable for tax charged on a gain from a policy of life insurance or a capital redemption policy under section 466, and

(b)there were one or more days in the material interest period that were foreign days.

(2)Subsection (3) also applies if—

(a)trustees are liable for tax charged on a gain from a policy of life insurance or a capital redemption policy under section 467 where—

(i)of conditions A to D in that section, only condition B is met, and

(ii)the absent settlor condition which is met is the one in subsection (4)(b) of that section (deceased settlor),

(b)there were one or more days in the material interest period that were foreign days, and

(c)the deceased died—

(i)in a tax year for which the deceased was UK resident but not one that was a split year as respects the deceased, or

(ii)in the UK part of a tax year that was a split year as respects the deceased.

(2A)Foreign days” are—

(a)days falling within any tax year for which the deceased was not UK resident, and

(b)days falling within the overseas part of any tax year that was a split year as respects the deceased.

(3)In determining the liability for tax of the personal representatives or trustees, the gain on which the tax is charged in the case of the personal representatives or trustees is to be reduced by the appropriate fraction.

(4)The appropriate fraction is—

(5)In subsection (3) the reference to the gain is to be read in accordance with section 463C(8) (which relates to restricted relief qualifying policies) if applicable.

(6)In this section “the material interest period” means so much of the policy period falling before the deceased's death as during which the deceased met condition A, B or C in section 465 in relation to the policy (subject to subsection (8)).

(7)Subsections (8) and (9) apply if, before the deceased's death, there was an assignment falling within section 487(c) in relation to the policy where the deceased was the assignee.

(8)There is to be added to the material interest period any part of the policy period falling before the assignment—

(a)during which the assignor met condition A, B or C in section 465 in relation to the policy, and

(b)which is not included in the material interest period under subsection (6).

(9)In relation to any period added to the material interest period under subsection (8), in subsection (2A)(a) and (b) the reference to the deceased is to be read as a reference to the assignor.

(10)For the purposes of subsections (6) and (8), in section 465(2) to (4) references to the rights under the policy are to be read as including references to a share of those rights.

(11)In this section “the policy period” means the period for which the policy has run before the chargeable event occurs.

(12)If the policy is a policy of life insurance which is a new policy in relation to another policy, for the purposes of subsection (11) the new policy is to be taken to have run—

(a)from the issue of the other policy, or

(b)if it also was a new policy in relation to an earlier policy, from the issue of the earlier policy,

and so on; and in subsections (6) to (10) references to the policy are to be read accordingly as including any relevant earlier policy.

(13)In subsection (12) “new policy” has the meaning given in paragraph 17 of Schedule 15 to ICTA.