Taxes Consolidation Act 1997 section 724

Transfer of assets into or out of special investment fund

Section 724 was an anti-avoidance provision that deemed a disposal and reacquisition at market value where a life assurance company transferred assets into or out of its special investment fund in accounting periods ending on or before 31 December 2002.

• Where a life assurance company transferred the whole or part of an asset into or out of its special investment fund, the company was deemed to have disposed of and immediately reacquired the asset at its market value at the time of transfer.
• The deemed disposal crystallised any gains or losses that had accrued on the asset, ensuring they were brought into charge at the appropriate rate.
• For assets transferred into the special investment fund, gains or losses accruing before the transfer were subject to tax at the standard rate of income tax (20 per cent). For assets transferred out, gains or losses accruing within the fund were similarly crystallised and charged or allowed at 20 per cent.
• The provision applied only to accounting periods ending on or before 31 December 2002 and was subsequently repealed by section 52(1)(g) of the Finance Act 2003.