In Chapter II of Part XIII of the Taxes Act 1988 (life policies, life annuities and capital redemption policies) after section 553B (which is inserted by section 88 above) there shall be inserted—
(1)The Treasury may by regulations make provision imposing a yearly charge to tax in relation to personal portfolio bonds (“yearly” being construed for this purpose by reference to years as defined in section 546(4)).
(2)Subject to any provision to the contrary made by the regulations, any charge to tax under this section is in addition to any other charge to tax under this Chapter.
(3)The regulations may make provision with respect to or in connection with all or any of the following—
(a)the method by which the charge to tax, or any relief, allowance or deduction against or in respect of the tax, is to be imposed or given effect;
(b)the person who is to be liable for the tax;
(c)the periods for or in respect of which the tax is to be charged;
(d)the amounts in respect of which, or by reference to which, the tax is to be charged;
(e)the period or periods by reference to which those amounts are to be determined;
(f)the rate or rates at which the tax is to be charged;
(g)any reliefs, allowances or deductions which are to be given or made against or in respect of the tax;
(h)the administration of the tax.
(4)The provision that may be made by the regulations includes provision for imposing the charge to tax by a method which involves—
(a)treating an event described in the regulations as if it were a chargeable event;
(b)treating an amount determined in accordance with the regulations as if it were a gain treated as arising on the happening of a chargeable event;
(c)deeming an amount determined in accordance with the regulations to be income of a person or body of persons (or to be part of the aggregate income of the estate of a deceased person); or
(d)applying section 740, with or without modification, in relation to an amount determined in accordance with the regulations.
(5)The provision that may be made in the regulations includes provision for the amount or amounts in respect of which, or by reference to which, the tax is to be charged for periods beginning after the coming into force of the regulations to be determined in whole or in part by reference to periods beginning or ending, premiums paid, or events happening, before, on or after the day on which the Finance Act 1998 is passed.
(6)The regulations may make provision excluding, or applying (with or without modification), other provisions of this Chapter in relation to policies or contracts which are also personal portfolio bonds.
(7)In this section, “personal portfolio bond” means a policy of life insurance, contract for a life annuity or capital redemption policy under whose terms—
(a)some or all of the benefits are determined by reference to the value of, or the income from, property of any description (whether or not specified in the policy or contract) or fluctuations in, or in an index of, the value of property of any description (whether or not so specified); and
(b)some or all of the property, or such an index, may be selected by, or by a person acting on behalf of, the holder of the policy or contract or a person connected with him (or the holder of the policy or contract and a person connected with him);
but a policy or contract is not a personal portfolio bond if the only property or index which may be so selected is of a description prescribed for this purpose in the regulations.
(8)The regulations may prescribe additional conditions which must be satisfied if a policy or contract is to be a personal portfolio bond.
(9)The regulations—
(a)may make different provision for different cases, different circumstances or different periods; and
(b)may make incidental, consequential, supplemental or transitional provision.
(10)In this section, “holder”, in the case of a policy or contract held by two or more persons, includes a reference to any of those persons.
(11)Section 839 (connected persons) applies for the purposes of this section.”