Finance Act, 1991

Relief in respect of certain policies of insurance relating to tax payable on gifts.

119.—(1) In this section—

“appointed date” means—

(a) a date occurring not earlier than 8 years after the date on which a relevant insurance policy is effected, or

(b) a date on which the proceeds of a relevant insurance policy become payable either on the critical illness or the death of the insured, or one of the insured in a case to which paragraph (b) of the definition of “insured” relates, being a date prior to the date to which paragraph (a) of this definition relates;

“insured” means—

(a) where the insured is an individual, that individual, or

(b) where the insured is an individual and the spouse of that individual at the date the policy is effected, that individual and the spouse of that individual, jointly or separately, or the survivor of them, as the case may be;

“relevant insurance policy” means a policy of insurance—

(a) which is in a form approved by the Commissioners for the purposes of this section,

(b) in respect of which annual premiums are paid by the insured,

(c) the proceeds of which are payable on the appointed date, and

(d) which is expressly effected under this section for the purpose of paying relevant tax;

“relevant tax” means gift tax or inheritance tax, payable in connection with an inter vivos disposition made by the insured within one year after the appointed date, excluding gift tax or inheritance tax payable on an appointment out of an inter vivos discretionary trust set up by the insured.

(2) The proceeds of a relevant insurance policy shall, to the extent that such proceeds are used to pay relevant tax, be exempt from tax and shall not be taken into account in computing such tax.

(3) Subject to the provisions of section 54 of the Principal Act and section 127 of the Finance Act, 1990 , where the insured makes an inter vivos disposition of the proceeds, or any part of the proceeds, of a relevant insurance policy other than in paying relevant tax, such proceeds shall not be exempt from tax.

(4) A relevant insurance policy shall be a qualifying insurance policy for the purposes of section 60 of the Finance Act, 1985 , where the proceeds of such relevant insurance policy become payable on the death of the insured or one of the insured in a case to which paragraph (b) of the definition of “insured” relates:

Provided that such relevant insurance policy would have been a qualifying insurance policy if it had been expressly effected under that section.

(5) A qualifying insurance policy for the purposes of section 60 of the Finance Act, 1985 , shall be a relevant insurance policy where the proceeds of such qualifying insurance policy are used to pay relevant tax arising under an inter vivos disposition made by the insured within one year after the appointed date.

(6) Section 143 of the Income Tax Act, 1967 (as amended by section 60 of the Finance Act, 1985 ) is hereby amended by the addition to subsection (5) of the following paragraph after paragraph (c):

“(d) be given for the year 1991-92 and subsequent years of assessment in respect of premiums payable in respect of a relevant insurance policy within the meaning of section 119 of the Finance Act, 1991.”.