Finance Bill Tracking Service 2007 | Budget 2007 | Budget Notes

BN36 Purchased life annuities

Who is likely to be affected?

1   Insurance companies, friendly societies, and annuitants.

General description of the measure

2   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

3   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

4   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.

5   This measure will repeal and amend the sections in both Acts that relate to the determination.

Further advice

6   If you have any questions about this change, please contact Steven Gilbody on 020 7147 2606 (email: steve.gilbody@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk