Introduction New section 528 Reduction in amount charged on basis of non-UK residence where individual liable for tax
5.New section 528(1) provides that new subsection (2) applies to individuals who are liable to chargeable event gains and who have not been resident in the UK during the material interest period (defined in new section 528(5)). From 6 April 2013, when the statutory residence test applies, a day will only fall in new subsection (1)(b) if the individual is not resident in the UK for the whole of the relevant tax year. For information on how new section 528 applies to a year that, for the individual, is split between a UK part and an overseas part, see the Explanatory Notes on the Statutory Residence Test.
6.New section 528(2) provides that an individual’s liability to tax on a gain on a life insurance policy is to be reduced by the appropriate fraction.
7.New section 528(3) provides details of that fraction.
8.New section 528(4) provides that the reference to ‘gain’ in new subsection (2) is the gain reduced in accordance with section 463A(4), 463D(4) or 463E(3) ITTOIA.
9.New section 528(5) defines ‘material interest period’ for the purposes of this section.
10.New section 528(6) provides that new subsections (7) and (8) apply if there has been an assignment between spouses or civil partners before the chargeable event.
11.New section 528(7) explains that the material interest period includes so much of the policy period before the assignment during which the assignor meets condition A, B or C in section 465.
12.New section 528(8) explains that when a period falls under new subsection (7) any reference to an individual under new subsection (1)(b) is to be deemed to also include a reference to the assignor.
13.New section 528(9) provides that references to rights in section 465(2) to (4) ITTOIA include references to a share of those rights.
14.New section 528(10) defines the term ‘policy period’ for the purposes of new section 528.
15.New section 528(11) provides that where a new policy is issued for another policy (policy ‘A’) the ‘policy period’ in new subsection (10) includes the period for which (A) was in existence. If A itself is a new policy issued for another policy (policy ‘B’) the ‘policy period’ in new subsection (10) includes the period for which both A and B are in existence.
16.New section 528(12) explains that ‘new policy’ in new subsection (11) takes its meaning from paragraph 17 of Schedule 15 to ICTA 1988.