Taxes Consolidation Act 1997 section 730K

Disposal of foreign life policy

Section 730K sets out the income tax charge that applies when a policyholder disposes, in whole or in part, of a foreign life policy, including deemed disposals at the end of each eight-year period.

• A gain arising on the disposal of a foreign life policy is charged to income tax under Case IV of Schedule D, at 38 per cent for standard policies or 60 per cent for personal portfolio life policies, rising to 80 per cent where a personal portfolio life policy gain is not correctly returned
• The gain is computed on the same basis as for capital gains tax purposes under section 594, but if the computation produces a loss the gain is treated as nil and no loss relief is available
• Income tax paid by an individual on a foreign life policy gain is treated as capital gains tax paid for the purposes of capital acquisitions tax credit under section 104 of the Capital Acquisitions Tax Consolidation Act 2003
• A policyholder is deemed to dispose of and immediately reacquire a foreign life policy at market value at the end of each eight-year period from inception, triggering a charge under the section