The Government has laid regulations to amend the Transfer of Sums and Assets Regulations 2006 (the Transfer Regulations) following recent changes to the Finance Act 2004 (the FA 2004).
The Finance Act 2008 amended the FA 2004 so that specified surrenders of (or agreements to surrender) rights to payments under a lifetime annuity or dependant’s annuity are treated as an unauthorised payments. Unauthorised payments to or in respect of members are subject to tax charges under the FA 2004.
Where there is a transfer of the sums and assets relating to an annuity from one insurance company to another, the Transfer Regulations prescribe the circumstances in which a surrender of rights is not treated as an unauthorised payment by the FA 2004 (and consequently no tax charge arises). This is achieved by treating the new annuity as if it were the original one in prescribed circumstances.
These new regulations are intended to ensure that where sums or assets are transferred from the life insurance company that was providing the lifetime annuity or dependant’s annuity to another life insurance company, and are applied by the latter company towards the provision of another lifetime annuity or dependant’s annuity this will not constitute an unauthorised payment.
The regulations are expected to come into force on 1 November 2008.