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JOHN WOOLLEY provides an update on life policyholder taxation
KEY POINTS
- Changes have been made to how the loan relationship rules will apply to an investment life insurance contract
- Basis of accounting will determine tax treatment
- Fair value basis accounting will be taxed as a non-trading credit
- Historic cost basis accounting means a deemed chargeable event gain can be avoided
As announced in the 2007 Pre-Budget Report the application of the loan relationship rules to all investment life insurance contracts (largely investment bonds) from 1 April 2008 means broadly speaking that gains made by companies under UK and offshore investment life insurance contracts will be taxed as non-trading credits.
I covered this in my article Well insured? which was based on the original draft legislation.
However following the publication of the Finance Bill 2008 which introduced revised legislation...
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