Taxes Consolidation Act 1997 section 730F

Deduction of tax on the happening of a chargeable event

Section 730F sets out the rates of exit tax that will be applied to gains arising on a chargeable event in relation to a life policy.

• Exit tax (appropriate tax) applies at 38% (25% if the policyholder is a company that has made a declaration), or at 60% in the case of a personal portfolio life policy where the chargeable event occurs on or after 26 September 2001, or at 40% where the chargeable event occurs on or before 31 December 2000.
• Where tax has already been paid on an eight-year deemed disposal, it may be credited against tax calculated on the new gain arising on a subsequent chargeable event, with any excess refunded to the policyholder.
• An assurance company is entitled to deduct the exit tax from the return payable to the policyholder or to appropriate sufficient assets underlying the policy to meet the liability.
• Special collection rules under section 730FA applied in place of the normal rules during the period 26 September 2001 to 5 December 2001 in respect of personal portfolio life policies.