Taxation of Financial Services Compensation Scheme interventions
The measure
Policyholders may suffer a tax disadvantage where compensation is paid or in the case of certain interventions (such as transferring a policyholder's rights to another insurer) under the Financial Services Compensation Scheme (FSCS). The life policy or annuity policy may lose its tax advantages as a result.
Who will be affected?
The Finance Bill will contain legislation to protect the tax position of policyholders where the FSCS intervenes.
When?
Regulations can be made once the Finance Bill receives Royal Assent. They can be backdated to apply to an earlier period provided they do not increase anyone's tax liability.
This follows similar powers introduced in the Finance Act 2009 to provide similar protection for FCSC interventions affecting pension savers. It provides much needed protection.
