Commentary on Sections Structure of Chapters Overview Section 466: Person liable: personal representatives
1868.This section sets out how a gain is charged to tax when the rights under the policy or contract are held by the personal representatives of a deceased person’s estate. It is based on sections 547 and 553 of ICTA. The term “personal representatives” is defined in section 878 of this Act.
1869.There are two possible treatments. The first is conditional on the policy or contract being one that, were an individual liable to tax in respect of the gain arising on that policy or contract, no lower rate income tax allowance would be available under section 530. Broadly, that allowance is not given where the investment profits underlying the policy or contract are not subject to tax in the hands of the insurer. That may be because the investment profits were not so taxed in the hands of a UK based insurer or the policy or contract was held with a non-UK based insurer (and there was no equivalent foreign tax charge on investment profits in the hands of the insurer).
1870.Where this condition applies, the gain is taxable on the personal representatives as their income in that capacity. The personal representatives are thus liable for the tax.
1871.If the condition does not apply, the gain is not charged on the personal representatives under this Chapter. Instead, the gain falls into the “aggregate income of the estate of the deceased” for the purposes of Chapter 6 of Part 5 of this Act (see section 664 (the aggregate income of the estate)) and of Part 16 of ICTA.