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HMRC internal manual

Insurance Policyholder Taxation Manual

Sickness disability and unemployment insurance: tax treatment up to 5 April 1996

Up to 5 April 1996 ESCA83 (now obsolete) and before that ESCA26 (also obsolete) meant that most payments from Permanent Health Insurance and similar policies made for less than12 months were exempt from tax.

FA96/S143 introduced legislation to put the extra-statutory treatment on a statutory footing from 6 April 1996. This introduced ICTA88/S580A and ICTA88/S580B, which were later re- written as ITTOIA05/S735 to ITTOIA05/S743.

The legislation applied relief retrospectively to Mortgage Payment Protection and Creditor Insurance, neither of which had been covered by the Extra-Statutory Concessions, but which in practice had rarely been taxed.

Further reference and feedback IPTM1013