Revenue Note for Guidance
730J Payment in respect of foreign life policy
Summary
This section sets out the income tax regime which applies to a foreign life policy when the policyholder receives a payment without there being a whole or part disposal of the policy.
Details
This section applies from 26 September 2001 for payments in respect of a foreign life policy that is a personal portfolio life policy. In any other case it applies from 1 January 2001.
Individual
(a) Where a policyholder (who is an individual) of a foreign life policy receives a payment in respect of the policy and the amount of the payment is correctly included in a return, it will be liable to income tax as outlined in Table 1 below —
Chargeable event arising — |
Regular payment |
Non-regular payment (excluding PPLPs) |
PPLPs – see section 730BA – applicable from 26 September 2001 |
Before 1 January 2009 |
Standard rate of income tax (20%) |
Standard rate of income tax (20%) plus 3% |
Standard rate of income tax (20%) plus 23% |
Between 1 January 2009 and 7 April 2009 |
Standard rate of income tax (20%) plus 3% |
Standard rate of income tax (20%) plus 6% |
Standard rate of income tax (20%) plus 26% |
Between 8 April 2009 and 31 December 2010 |
25% |
28% |
Standard rate of income tax (20%) plus 28% |
Between 1 January 2011 and 31 December 2011 |
27% |
30% |
Standard rate of income tax (20%) plus 30% |
Between 1 January 2012 and 31 December 2012 |
30% |
33% |
Standard rate of income tax (20%) plus 33% |
Between 1 January 2013 and 31 December 2013 |
33% |
36% |
Standard rate of income tax (20%) plus 36% |
Between 1 January 2014 and 31 December 2014 |
41% |
41% |
60% |
On or after 1 January 2015* |
41% |
41% |
60% |
*See additional Note following Table 2 below
However, if the payment is not correctly included in such a return, it will be liable to income tax at the rates outlined in Table 2 below:-
Table 2:
Chargeable event arising – |
Not a PPLP |
PPLPs – see section 730BA – applicable from 26 September 2001 |
Before 1 January 2009 |
Marginal rate (i.e. 20% or 41% as appropriate) |
Marginal rate (i.e. 20% or 41% as appropriate) plus 20% |
Between 1 January 2009 and 7 April 2009 |
Marginal rate (i.e. 20% or 41% as appropriate) |
Marginal rate (i.e. 20% or 41% as appropriate) plus 23% |
Between 8 April 2009 and 31 December 2010 |
Marginal rate (i.e. 20% or 41% as appropriate) |
Marginal rate (i.e. 20% or 41% as appropriate) plus 25% |
Between 1 January 2011 and 31 December 2011 |
Marginal rate (i.e. 20% or 41% as appropriate) |
Marginal rate (i.e. 20% or 41% as appropriate) plus 27% |
Between 1 January 2012 and 31 December 2012 |
Marginal rate (i.e. 20% or 41% as appropriate) |
Marginal rate (i.e. 20% or 41% as appropriate) plus 30% |
Between 1 January 2013 and 31 December 2013 |
Marginal rate (i.e. 20% or 41% as appropriate) |
Marginal rate (i.e. 20% or 41% as appropriate) plus 33% |
Between 1 January 2014 and 31 December 2014 |
Marginal rate (i.e. 20% or 41% as appropriate) |
80% |
On or after 1 January 2015 |
41% |
80% |
Note: With effect from 1 January 2015, the distinction between ‘correctly included’ and ‘not correctly included’ is removed for other than a PPLP, and, any payment, whether regular or non-regular, (excluding from a PPLP), will be liable to income tax at the rate of 41% (i.e. one percentage point higher than the higher rate of income tax (40%) that comes into effect from that same date).
Company
(b) A company in receipt of a payment in respect of a foreign life policy is liable to tax on the amount thereof under Case III of Schedule D.
Relevant Date: Finance Act 2021