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The Taxation of Equitable Life (Payments) Order 2011

Draft. This instrument was laid in draft and may differ from the one made. Look for the made version under its title.

Draft 2011, ISBN 9780111509326

Original text. legislation.gov.uk does not revise statutory instruments, so later amendments are not shown here. Changes made to it are listed under each provision when known.

Draft Order laid before Parliament under section 1(5) of the Equitable Life (Payments) Act 2010, for approval by resolution of each House of Parliament.

Capital Gains Tax

Corporation Tax

Income Tax

Inheritance Tax

Tax Credits

Made ***

Coming into force in accordance with article 1(1)

The Treasury make the following Order in exercise of the powers conferred by section 1(3) and (4) of the Equitable Life (Payments) Act 2010f1

In accordance with section 1(5) of that Act, a draft of this Order was laid before Parliament and approved by a resolution of each House of Parliament.

Annotations to the whole text

Footnotes

f1

2010 c. 34.

Contents

  1. 1Citation, commencement, effect and interpretation
  2. 2Capital gains tax
  3. 3Corporation tax
  4. 4Income tax
  5. 5Inheritance tax
  6. 6Tax Credits
  7. Signature
  8. Explanatory note

1Citation, commencement, effect and interpretation

(1)

This Order may be cited as the Taxation of Equitable Life (Payments) Order 2011 and shall come into force on the day after the day on which it is made.

(2)

This Order has effect in relation to authorised payments made after the day on which this Order is made.

(3)

In this Order “authorised payment” means a payment to which section 1 of the Equitable Life (Payments) Act 2010 applies.

2Capital gains tax

An authorised payment shall be disregarded for the purposes of capital gains tax.

3Corporation tax

An authorised payment shall be disregarded for the purposes of the Corporation Tax Acts.

4Income tax

An authorised payment shall be disregarded for the purposes of the Income Tax Acts.

5Inheritance tax

(1)

For the purposes of the Inheritance Tax Act 1984f1—

(a)

in determining the value of a person’s estate immediately before that person’s death, no account shall be taken of any value attributable to a right to, or interest in, an authorised payment made after that person’s death; and

(b)

in determining the value of relevant property immediately before a ten-year anniversary for the purposes of the charge under section 64f2 of the Inheritance Tax Act 1984, no account shall be taken of any value attributable to a right to, or interest in, an authorised payment made on or after that ten-year anniversary.

(2)

In this article—

  • “estate” has the meaning given by section 272 of the Inheritance Tax Act 1984;

  • “relevant property” has the meaning given by section 58f3 of that Act; and

  • “ten-year anniversary” has the meaning given by section 61 of that Act.

6Tax Credits

In calculating investment income in accordance with regulation 10 of the Tax Credits (Definition and Calculation of Income) Regulations 2002f1, an authorised payment shall be disregarded.

Signature

name

name

Two of the Lords Commissioners of Her Majesty’s Treasury

Date

Explanatory note

(This note is not part of the Order)

This Order makes provision for payments which the Treasury authorise in cases where persons have been adversely affected by maladministration in the regulation before December 2001 of the Equitable Life Assurance Society. It provides for authorised payments to be disregarded, to the extent described in the Order, for the purposes of liability to tax and entitlement to tax credits.

Article 1 provides for citation and commencement and defines “authorised payment” as a payment to which section 1 of the Equitable Life (Payments) Act 2010 (c. 34) applies.

Articles 2, 3 and 4 provide respectively that an authorised payment is disregarded for the purposes of capital gains tax, the Corporation Tax Acts and the Income Tax Acts.

Article 5 provides that any value attributable to rights to, or interests in, an authorised payment that is made after a person’s death is disregarded in calculating the value of the person’s estate which is subject to inheritance tax on their death, and that such rights or interests are similarly disregarded in calculating the value of relevant property subject to a ten-year anniversary charge for inheritance tax, where an authorised payment is made on or after such anniversary.

Article 6 provides that in calculating investment income for the purposes of entitlement to tax credits an authorised payment shall be disregarded.

A full and final Impact Assessment has not been produced for this instrument as a negligible impact on the private or voluntary sectors is foreseen.