HC Deb 12 March 1976 vol 907 cc350-1W
Mr. Duffy

asked the Chancellor of the Exchequer whether he will make a statement about the tax treatment of qualifying life policies issued before 1st April 1976 which are varied on or after that date.

Mr. Robert Sheldon

Yes. Under the provisions relating to life assurance contained in the Finance Act 1975 "qualifying" life policies—broadly, those entitled to tax reliefs—issued before an appointed day, since fixed for 1st April 1976, and varied on or after that date must, if they are to remain qualifying policies, either be individually certified as qualifying by the Inland Revenue or conform to a standard form of policy which has already been so certified.

It has recently become clear in discussions between the Revenue and the Life Offices Association that the number of policies which would need to be certified individually by the Revenue under this procedure would be very much greater than had been expected, probably resulting in inconvenience and delay to the life offices and to policy holders. Accordingly it has been decided to defer for the time being introduction of the new procedure in relation to these policies.

The Government, therefore, propose to include in the Finance Bill provisions which will have the following effects:

  1. (1) Policy variations effected on or after 1st April 1976 which are "not significant" within the definition of that term in Paragraph 10(3)(a) of Schedule 1, Income and Corporation Taxes Act 1970, will not necessitate the retesting of the qualifying status of the policy. Any other variations will require that the policy be brought fully into line under the amended rules of the Finance Act 1975 if its qualifying status is to continue.
  2. (2) Until a further appointed day certificates of qualification in respect of policies so qualifying will continue, as now, to be given by the issuing life office.

Life Offices will, no doubt, wish to operate the new procedure from 1st April 1976 in anticipation of the legislation, and the Revenue has been authorised to accept certificates issued on this basis during the interim period.