Taxes Consolidation Act 1997 section 722

Benefits from life policies issued before 6th April, 1974

Section 722 allows a life assurance company to retain a portion of policy benefits to cover corporation tax on chargeable gains arising from investment-linked policies issued before 6 April 1974.

• The section applies to investment-linked life assurance policies issued before 6 April 1974 where the policy benefits are determined by reference to specified investments but do not provide for any deduction on account of tax on chargeable gains.
• Where the company's life assurance fund referable to those policies consists wholly or mainly of the specified investments, and a chargeable gain accrues (or would accrue) on disposal of those investments to meet a policy liability, the company may retain part of the benefits.
• The amount the company may retain from the benefits cannot exceed the corporation tax at the full rate on the chargeable gain, computed before the retention and reduced in accordance with section 78(1).
• The retention applies to all benefits payable under the policies, including benefits arising on the surrender of a policy.