HC Deb 17 November 1983 vol 48 c505W
Mr. Hill

asked the Chancellor of the Exchequer what will be the details of his proposed legislation for taxing disposals of holdings in offshore and overseas funds; and whether, in addition to proposing legislation on investments in such funds, he intends to change the tax treatment of life assurance policies issued by non-resident life offices to United Kingdom residents.

Mr. Moore

I have authorised the Inland Revenue to issue today a statement giving the details of the new provisions for investments in offshore and overseas funds and of changes we intend to introduce in the tax rules for life assurance policies issued by non-resident life offices.

The overall shape of the new provisions relating to the funds will be as follows:

  1. (i) they will apply to disposals after 1 January 1984 of interests in funds held by investors resident or ordinarily resident in the United Kingdom;
  2. (ii) they will apply to all funds not resident in the United Kingdom, irrespective of the type of investment they undertake — they will not be confined to specific types of fund such as money funds;
  3. (iii) the new rules will not apply where it is established that a fund genuinely distributes all its income. For this purpose, funds will be able to obtain regular clearance as "distributors" from the Inland Revenue;
  4. (iv) except for any gain accruing before 1 January 1984, the whole of the investor's gain on disposal will be taxed as income;
  5. (v) as at present, the capital gains regime will apply to gains accruing before 1 January 1984: the new rules will not apply retrospectively to such gains.

As regards life assurance policies iss Lied by non-resident life offices to United Kingdom residents, there are a number of anomalies in the present rules. We propose to make the following changes in their tax treatment:

  1. (i) policies issued in respect of insurances made after midnight tonight will not satisfy the qualifying conditions unless issued or administered in the course of United Kingdom branch business.
  2. (ii) United Kingdom residents will be liable to income tax in full on their profits from non-qualifying policies issued after midnight tonight.

The provisions will also apply to existing policies in certain circumstances; but special measures will be taken to safeguard the bona fide expatriate business of non-resident life companies. Fuller details are given in the Inland Revenue statement.

It is proposed to legislate in the 1984 Finance Bill. Draft clauses will be published in due course.