BN 36: Purchased life annuities

Who is likely to be affected?

  1. Insurance companies, friendly societies, and annuitants.

General description of the measure

  1. Legislation will be introduced in Finance Bill 2007 to repeal the requirement that an Officer of HM Revenue and Customs must determine the tax-exempt capital element of a Purchased Life Annuity (PLA), calculated by the insurer. This will clear the way for a re-write of the PLA regulations.

Operative date

  1. The measure will have effect on or after a date to be appointed by Treasury Order, to enable consultation with the industry about a rewrite of the PLA regulations during the course of 2007. The appointed date will coincide with revised PLA regulations taking effect.

Current law and proposed revisions

  1. The requirement for the determination by an Officer of HMRC of the exempt capital amount of a PLA is in the Income and Corporation Taxes Act 1988, for companies, and the Income Tax (Trading and Other Income) Act 2005 for other persons.
  2. This measure will repeal and amend the sections in both Acts that relate to the determination.

Further advice

  1. If you have any questions about this change, please contact Steven Gilbody on 020 7147 2606 (email: steve.gilbody@hmrc.gsi.gov.uk).