Commentary

E1.455D Life insurance gains—relief for deficiencies on termination

Personal and employment tax

E1.455D Life insurance gains—relief for deficiencies on termination

E1.455D Life insurance gains—relief for deficiencies on termination

This relief may be available on the termination of an individual's interest in a policy or contract, ie on a death, maturity, surrender of all rights or taking a capital sum as a complete alternative to annuity payments1. It is given as a deduction from total income and is only available to individuals2.

A deficiency arises where the termination does not give rise to a gain because of deductions for gains on previous events (see E1.452–E1.453G). Any deductions in respect of personal portfolio bonds are ignored3.

Giving effect to relief

An individual who makes a claim is entitled to a tax reduction for the tax year in which the deficiency arises if he would otherwise be liable to income tax at the higher rate, Scottish higher rate, Welsh higher rate or the dividend upper rate for that year and, had a gain arisen, he would have been liable to income tax on it (or he would have been so liable if he had been UK resident). The reduction is given at step 6 of the calculation in ITA 2007, s

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