Annex 1: Minor changes in the law made by the Act: Change 94: Gains from contracts for life insurance etc: enactment of regulations about personal portfolio bonds in primary legislation: sections 515 to 526
This change replaces regulations about personal portfolio bonds made by the Treasury under section 553C of ICTA with provisions in primary legislation, and cuts down the power in section 553C of ICTA as a result.
Section 553C of ICTA confers a wide power on the Treasury to use regulations to impose a yearly charge to tax in relation to personal portfolio bonds. It permits the regulations to make provision about matters such as the method by which the charge to tax is imposed and its administration. The section defines “personal portfolio bond”, but the regulations can in effect make certain modifications to that definition. In particular they can prescribe property and indexes which may be selected without a policy or contract being a personal portfolio bond.
The regulations under section 553C of ICTA are rewritten in Chapter 9 of Part 4 of this Act, so far as they apply in relation to income tax. Section 516 defines “personal portfolio bond”, for example, and sections 518 to 521 make provision about the kinds of index or property which may be selected without a policy or contract being a personal portfolio bond. Sections 522 to 524 set out the method for calculating the charge to tax on personal portfolio bonds. The regulations continue to apply in relation to corporation tax.
Section 526 contains a power to make regulations about certain matters in relation to the personal portfolio bond provisions in Chapter 9 of Part 4 of this Act. The power is more limited than the power in section 553C of ICTA. This reflects the fact that provision about personal portfolio bonds has now been made in the regulations and in this Act.
The only matter that can be dealt with in regulations under section 526 is the administration of the charge to tax on personal portfolio bonds. Any other changes to the personal portfolio provisions in this Act need to be made in primary legislation.
This matter can be dealt with in the regulations themselves or by modifications to Chapter 9 of Part 4 of this Act or Chapter 2 of Part 13 of ICTA. Chapter 2 of Part 13 of ICTA includes certain administrative provisions which apply in relation to income tax. So section 526 includes a power to amend those provisions as they apply to personal portfolio bonds.
The power in section 526 for regulations to be made which amend primary legislation reflects the power under section 553C of ICTA to amend the regulations about personal portfolio bonds, and to exclude or apply (with or without modifications) other provisions of Chapter 2 of Part 13 of ICTA in relation to personal portfolio bonds.
This change has no implications for the amount of income liable to tax, who pays it, or when. It affects only the method by which the provisions on personal portfolio bonds may be amended in the future.