Sending life insurance Chargeable Event Certificates as an insurer

Question 1

1.  Introduction

Accepted Answer

Insurers are required to deliver certificates under section 552 Income and Corporation Taxes Act (ICTA) 1988 (as inserted by Schedule 28 Finance Act 2001).

The purpose of this document is to describe the standard format in which insurers should deliver these Chargeable Event Certificates to HMRC for chargeable events occurring on or after 6 April 2002.

All statutory references are to the Income Tax (Trading and Other Income) Act 2005 unless otherwise stated. More guidance on the type of events can be found in the Insurance Policyholder Taxation Manual (IPTM).

1.1 Reportable requirements

Insurers must supply details of all chargeable event gains where the value of the gain, aggregated where relevant with all gains connected with it, is more than half the ‘basic rate limit’ for the relevant year of assessment. The ‘basic rate limit’ is defined in subsections 1(2) (b) and 1(3) ICTA 1988.

Insurers must also supply details to HMRC for all whole assignments for money or money’s worth (whatever the value of the gain), unless they are satisfied that no gain is to be treated as arising by reason of the assignment.

For gains whose value, when aggregated with connected gains, if any, exceeds half the basic rate limit, insurers may report them either on paper in the prescribed form or in a form that meets the standard specification.

For yearly gains on Personal Portfolio Bonds (as defined section 515), the reporting rules apply to gains that are treated as arising on or after 6 April 2002.

A gain is connected with another gain in accordance with section 552(8) if:

the insurer and policyholder are the same
both gains are attributable to the same year of assessment or, for corporate policyholders, the same financial year
the terms of the policies or contracts are the same apart from any difference in their maturity dates
the policies or contracts were made on the same date

For policyholders that are individuals or trustees, the relevant year of assessment for a gain treated as arising by virtue of section 498 is the year of assessment which includes the end of the ‘year’ (as defined section 499) in which the part surrender or part assignment took place. In any other case, the relevant year of assessment is the year of assessment in which the chargeable event occurred or, for yearly gains on Personal Portfolio Bonds, in which the gain is treated as arising.

For policyholders that are companies and where the event occurred prior to the accounting period ending 31 March 2008 only, the relevant year of assessment is the year of assessment that includes the end of the financial year which includes the end of the ‘year’ (as defined in section 499) in which the part surrender or part assignment took place. In any other case, it is the year of assessment that includes the end of the financial year in which the chargeable event occurred or, for yearly gains on Personal Portfolio Bonds, in which the gain is treated as arising.

An insurer may also deliver certificates to HMRC for all gains treated as arising on the happening of chargeable events on or after 6 April 2002 (or the yearly gain on a Personal Portfolio Bond treated as arising on or after that date), whatever their amount, in a form that meets the standard specification (for example, not on paper).

Insurers must give information for the suitable policyholder, including:

policy number
title
forenames
surname
full address including postcode
category of chargeable event
date of event
number of years
number of policyholders
whether Income Tax treated as paid on the gain
insurer name and ID
currency used to complete the certificate

Where the event is a chargeable event by virtue of section 498, the date in which the ‘year’ (as defined section 499) in which the event took place ends.

Where the event is anything other than a whole assignment, the amount of:

the gain
Income Tax treated as paid

Where the event is a whole assignment for money or money’s worth, the:

amount of relevant capital payments
amount of premiums or consideration
value of parts previously assigned
amount of total previous gains
capital element paid on account of annuity

All monetary amounts should be reported by insurers in whole pounds. For example, £1,000.45 could be reported as 1000 or 1001 depending whether it is to the advantage of the individual taxpayer to round up or down.

1.2 Insurers unable to meet standard specification

If an insurer is unable to meet the standard specification then submission of Chargeable Event Certificate data sent electronically will not be accepted.

1.3 Time limit for delivery of certificates

Insurers are required to deliver Chargeable Event Certificates to HMRC before the end of the relevant 3 month period. The relevant period is whichever ends the latest out of:

the period of 3 months following the end of the year of assessment in which the event happened or, if the policyholder is a company, the period of 3 months following the end of the financial year in which the event happened
the period of 3 months following the end of the year (as defined in section 499) in which the event happened (if the event is a surrender or assignment of a part that is a chargeable event by virtue of section 498)

However, if the event is a death or an assignment in whole or in part, under section 552(7)(c) ICTA 88, where an insurer receives written notification of a death or assignment they must report the relevant chargeable event details to HMRC within 3 months of receiving this notification. Where this notification is received outside of the tax year in which the date of event occurs, this can cause administrative difficulties for insurers who then need to submit several extra batches of certificates, either on paper or magnetic media, to HMRC during the year in order to meet the time limits.

These difficulties can also apply where there is an event giving rise to a gain which only has to be reported to HMRC owing to the existence of a connected gain arising by virtue of a death or assignment. The time limit for reporting the former gain would be the same as that for reporting the connected gain that first alerts the insurer to the fact that the aggregate of connected gains exceeds the half basic rate threshold (for example, 3 months after the insurer receives written notification of the death or assignment).

With the aim of encouraging insurers to submit information on an annual basis, where an insurer reports chargeable event details on a death or assignment to HMRC within 3 months of the end of the tax year in which the insurer received written notification of the event, HMRC will now accept this as meeting the reporting requirement. This time limit will also apply to certificates issued in the exceptional circumstances described in section 552(7)(d), where the issue of a certificate is only required because of the happening of another event. Then the insurer may report details to HMRC within 3 months of the end of the tax year in which it receives notification of that other event. Provided an insurer has issued the certificate to HMRC within this period, HMRC will not seek a penalty even though the certificate may not have been issued in strict accordance with the statutory time limit in section 552(7)(c).

Example 1

There is a part-surrender on 1 October 2006 and the policy year ends on 31 May 2007. The first bullet applies. The event is deemed to occur at the end of the policy ‘year’ for example, on 31 May 2007, which falls in the year of assessment (or ‘tax year’) ending on 5 April 2008. The insurer would then have until 5 July 2008 to report the gain to HMRC.

Example 2

There is a part assignment on 1 September 2006 giving rise to a gain and the policy year ends on 30 April 2007. Then, the insurer does not need to report the gain to HMRC until 5 July 2008. The second bullet would apply and the tax year, in which the ‘year’ in which the event is treated as happening ends, is 2007 to 2008.

Example 3

Where a death on 1 March 2006 was reported to the insurer on 1 September 2006 the third bullet above would apply. The insurer would therefore have until 5 July 2007 to report the gain to HMRC even though the tax year in which the event happened is 2005 to 2006.

Continuing this example, if the gain on the death was only £10,000, but there was also a £10,000 gain on a part assignment in tax year 2005 to 2006, the third bullet would apply and the insurer would have until the same date — 5 July 2007 — to report to HMRC not only the gain on death but also the gain on the part assignment.

1.4 Submission of returns

When you are ready to submit your reports they should be submitted using Secure Exchange Service (SDES) or sent to Data Acquisition and Exchange by email only. You can get advice on how to send your returns to Data Acquisition and Exchange by sending an email to: da.enquiries@hmrc.gov.uk.

Do not send returns to Specialist Personal Tax (former Car Audit).

1.4.1 Live submissions

These should be submitted using the Secure Electronic Transfer (SET).

Returns on physical media are no longer accepted.

Read Appendix F to get more information about sending paper certificates.

Question 2

2.  Glossary

Accepted Answer

2.1 Insurer

The life insurer resident, or with a branch, in the UK who will be responsible for the management of the process for delivering batches of certificates. This is normally the body by or with whom the policy or contract was issued, entered into or effected. But where the obligations of the body that issued, entered into or effected the policy or contract have been transferred to another insurer to whom there has been a transfer of the whole or any part of a business, the insurer responsible for delivering batches of certificates in respect of chargeable events arising after date of the transfer, or in the case of death or assignment first notified after the date of the transfer, will be the transferee.

2.2 Report of Chargeable Event Certificates

A report of Chargeable Event Certificates will consist of one or more sub-reports.

2.3 Sub-report of Chargeable Event Certificates

Chargeable Event Certificates will be provided to HMRC by the insurer in one or more sub-reports. All references are automatically opened with the default sub-report number 01. In some cases additional sub-reports may be required where an insurer needs to divide the batches of certificates:

If you need an additional sub-report number this must be agreed with HMRC by emailing your requirements to da.enquiries@hmrc.gov.uk.

Typical reasons for requiring additional sub-report numbers are the insurer may:

be supplying the batch of certificates either on different media or from different systems
have a regional system and is unable to collate this information onto one report, the sub-report is identified by the ‘/99’ suffix to the insurer reference and relates to a specific insurer system/region/media combination

An insurer may be notified of a death or assignment of the whole or a part of the policy more than 3 months after the end of the tax year in which the death or assignment occurred. In such circumstances, it will clearly not be possible for the insurer to report the gain arising on the death or assignment at the same time as it reports the other gains for the tax year in which the death or assignment occurred.

The insurer should keep reports of such gains separate from reports of gains arising in a later tax year for example, on a separate file. If an insurer decides to report these gains electronically rather than on paper, it should treat the report as a supplementary sub-report for the year to which the gains relate using the appropriate sequential batch number.

2.4 Batches of Chargeable Event Certificates

There is a limit of one gigabyte of data that can be read and processed at a time. For this reason where a sub-report exceeds this limit, insurers are required to divide their sub-report into a number of reproducible batches. Each chargeable event sub-report consists of one or more batches of up to one gigabyte each. A sub-report which is greater than one gigabyte is required to be split into batches. A sub-report which is less than one gigabyte may be submitted in one batch. Batches are sequentially numbered (within each sub-report) to enable the batch to be re-produced and duplicate batches avoided. The batches can be provided at any time (at the insurers discretion) within the legislatively defined time frame.

2.5 Encryption

You can get advice on security and encryption by sending an email to: da.enquiries@hmrc.gov.uk.

2.6 Allowable character sets

Reports can be accepted in either upper or lower case characters. All data must be encoded in ASCII or UTF8 (multibyte) character sets. Advice on allowable character sets can be found at Appendix C within this guide.

2.7 Use of multibytes

Financial institutions may need to use characters other than upper and lower case A to Z in their databases. These may then appear in returns.

In UTF8, accented characters such as é and umlauted characters such as ü are stored as multiple bytes of data. They are multibyte characters, which should count as a single character for creating your return.

The rule about counting characters and not bytes applies to all types of encoding.

If you use UTF8 when compiling your return, you must count multibyte characters as a single character. This is to avoid your return failing processing and a resubmission request.

2.8 Structured names

This refers to the holding of names in a structured format such as, the title, initials or forenames and surname components are held separately in named fields.

Example

Policyholder title: Mr
Policyholder forenames/initials: Frank A
Policyholder surname: Bloggs

2.9 Unstructured names

This refers to the holding of names in an unstructured format such as, all of the name details are presented together in a single free text field.

Example

Policyholder name: ‘Mr Frank A Bloggs’

Question 3

3.  Report format

Accepted Answer

3.1 Record types

Four record types are required within each batch making up the chargeable event report:

Type 1

Identifies the insurer (or branch) delivering the certificates. It also asks you to define the length of some of the fields in the type 2 and type 3 records.

Type 2

Identifies the financial details for each chargeable event gain being reported.

Type 3

Identifies the personal details of the policyholders to each reported event.

Type 4

Gives the count of all the type 2 records (chargeable events).

3.2 Type 1 record — insurer information

Batches are required to be reproducible by the insurer.

Each batch must start with a type 1 record that defines the parameters for the batch, including the details of the insurer submitting the batch of certificates.

The type 1 record contains dynamic field definitions used to define the length of character data items within the type 2 and type 3 records which follow to cater for the differing field sizes and formats that may be received from different insurers. A single definition is permitted for each field which will apply to all instances of the data item within the type 2 and 3 records following the type 1 record.

Example

If 5 address lines of 20 characters have been defined for the policyholder information within the type 1 record, wherever an address is defined within the type 3 record a field of 100 characters will be expected and will be interpreted as consisting of 5 lines of 20 characters. Any addresses or lines which are shorter than the defined length will be padded out to the defined size with space characters.

Where a type 2 or type 3 record field is defined with a length of 0 (zero) in the type 1 record, the field does not actually appear in the reported record.

In the remainder of this document, fields which are defined dynamically, that is, defined according to your own requirements and needs are specified as having a format of CHAR X.

3.3 Type 2 record — chargeable event gain information

One or more type 2 records will follow each type 1 record. This record will have details of the chargeable event gain.

3.4 Type 3 record — policyholder information

One or more type 3 records must follow each type 2 record. There must be a type 3 record for each person party to the policy or contract.

3.5 Type 4 record

A single type 4 record follows the last type 3 record in each batch. The type 4 record contains a count of the number of chargeable events reported in the batch (for example, a count of type 2 records).

3.6 Record structure details

Field type C

Conditional fields. These fields must be completed where the conditions stated are met, otherwise pad with spaces.

Field type M

Mandatory fields. These fields must be completed using one of the values described.

Field type O

Non-mandatory fields. These should be completed where possible, otherwise pad with spaces.

Some of the fields specified in the type 1 record are used by the insurer to define the sizes of the fields following in the type 2 and type 3 records. The insurer is allowed to set some of these to zero lengths. These fields have been categorised as mandatory on the type 1 record because they must be supplied even though their contents may be set to zero.

In instances where the insurer has defined these field sizes to be zero, HMRC will not expect these fields to be present in the type 2 or type 3 records as appropriate.

3.7 Format definition

Wherever a ‘format’ instruction appears, followed by some alphabetic or numeric characters, it is intended to give guidance on the acceptable input to that particular field.

For example, ‘format A9999’ should be interpreted as follows:

A — any alphabetic character, unless stated specifically
9 — any digit from 0 to 9, unless stated specifically

For example, ‘format DDMMCCYY’ should be interpreted as follows:

DD — a numeric representation of a date within a month
MM — a numeric representation of a month within a year
CC — a numeric representation of a century
YY — a numeric representation of a year within a century

3.8 If your data does not fill the entire field

When padding a field with spaces, each character must be filled with a space character. For example, where the forename field is 40 characters. If the forename is Stephen (7 characters), the remaining 33 positions to the right are filled with space characters as described.

For UTF-8 coding, a space is the character with the decimal code 32.

Some fields should be right justified and some left justified, the information in the table in section 3.9.1 say which. Where a field is left justified you start from the left with data and pad the remaining characters to the right with spaces. For right justified, the characters to the left are padded with spaces.

Do not use tab characters (UTF-8 code 9). The tab is a single character that represents the number of spaces to the next tab stop on a printer, typewriter or text editor. So, it does not represent any particular number of spaces in other contexts, such as Bank, Building Society Interest returns.

3.9 Record type structure

3.9.1 Type 1 record — insurer information

Data item name	Format	Type	Notes
Record type	CHAR 1	M	Value ‘1’
Record type	CHAR 2	M	Value ‘CE’
Insurer’s name	CHAR 50	M	The name of the insurer submitting the batch of certificates. Left justify pad with spaces. Name only, do not supply an address.
HMRC insurer ref	CHAR 8	M	Format is A9999/99. The first 5 characters are issued to the insurer by HMRC. The /99 suffix enables the Insurer to differentiate between the insurer’s systems or geographic boundaries that have been used for submitting batches.
Batch number	CHAR 3	M	Format is 999. Batch number within the sub-report of certificates, starting at ‘001’ for the first submission and increasing sequentially for subsequent batches. The number is reset for the first submission of certificates forming part of the report relating to the next tax year. Right justify pad with zero (pad with space allowed).
Policyholder title length	CHAR 2	M	Format is 99. The number of characters used to supply a policyholder’s title. Right justify, pad with zeros (pad with spaces allowed). Set to ‘00’ if unstructured name is always supplied in the policyholder name field or policyholder titles are not held on the insurer’s system.
Policyholder forenames length	CHAR 2	M	Format is 99. The number of characters used to supply forenames or initials in policyholder forenames field. Right justify, pad with zeros (pad with spaces allowed). Set to ‘00’ zero if unstructured name is always supplied in the policyholder name field.
Policyholder name length	CHAR 3	M	CHAR 3 M format is 999. The number of characters used to supply a policyholder’s surname for structured names or the number of characters used to supply the full name for unstructured names whichever is the greater. This cannot be zero ‘000’. Right justify pad with zeros (pad with spaces allowed).
Policyholder address line length	CHAR 3	M	Format is 999. The length of each address line used within the policyholder’s address. This cannot be zero ‘000’. Right justify pad with zeros (pad with spaces allowed).
Policyholder address line count	CHAR 2	M	Format is 99. The number of address lines used for policyholder’s address. This cannot be zero ‘00’. Right justify pad with zeros (pad with spaces allowed).
Policyholder postcode supplied	CHAR 1	M	‘Y’ if postcodes are held separately from the address on the insurer’s system. ‘N’ if postcodes are only held as part of the address on the insurer’s system.

3.9.2 Type 2 record — chargeable event gain information

Data item name	Format	Type	Notes
Record type	CHAR 1	M	Value ‘2’
Policy number	CHAR 24	M	The unique identifying designation given by the insurer to the policy or contract. Left justify pad with spaces.
Currency code	CHAR 3	C	The SWIFT (Society for Worldwide Interbank Financial Telecommunication) code of the currency used to report all monetary amounts. This must be completed when the currency used is not the currency of the UK.
Type of chargeable event	CHAR 2	M	Format is numeric 1 to 99. This is the category of the chargeable event.
Date of chargeable event	CHAR 8	M	Format is DDMMCCYY. The date on which the chargeable event occurred. For example, date of a full surrender 31 March 2003 should be reported as 31032003.
Date on which policy year ends	CHAR 8	C	Format is DDMMCCYY as for date of chargeable event. The date of the day before the next anniversary of when the policy or contract was made to occur after the date of the part surrender or part assignment. The insurer needs to make this entry in addition to the entry in ‘Date of chargeable event’ when the chargeable event type is 6 or 7 — see paragraph 11.3 of Appendix E.
Number of years	CHAR 3	M	Format is numeric 1 to 999. The entry is the number of complete years relevant for computing the appropriate fraction of the gain for the purposes of section 536 apart from section 536(7) and (8).
Amount of chargeable event gain	CHAR 8	M	Format is numeric. It is a monetary amount. It must be a whole number. Insurer to round down. The amount of the gain is the amount calculated in accordance with the rules in ITTOIA05. This box is left empty if the chargeable event is an assignment (category of event 4).
Income tax treated as paid	CHAR 1	M	Format is Y for yes and N for no. The entry is Y if, on the assumption that the gain was chargeable to tax under section 463, the individual chargeable would be treated as having paid Income Tax at the basic rate on the amount of the gain in accordance with section 530. The answer is N if such an individual would not be so treated.
Amount of Income Tax treated as paid	CHAR 8	C	Format is numeric. It is a monetary amount. It must be a whole number. Insurer to round up. There is only an entry in this box if the answer to whether Income Tax is treated as paid is Y. Otherwise this box is left empty. It is also left empty if the chargeable event is an assignment (category of event 4). The entry is the amount of the gain multiplied by the basic rate of Income Tax for the relevant year of assessment.
Total of previous gains	CHAR 8	C	Format is numeric. It is a monetary amount. It must be a whole number. Insurer to round up. Complete this box only when the event is a whole assignment, category of event 4. Enter the aggregate of previous gains that arose in connection with the policy or contract, or in connection with any related policy or contract.
Premiums or consideration paid	CHAR 8	C	Format is numeric. It is a monetary amount. It must be a whole number. Insurer to round up. Complete this box only when the event is a whole assignment, category of event 4. Enter here the amounts previously paid under the policy or contract by way of premiums or paid otherwise by way of consideration for an annuity.
Relevant capital payments	CHAR 8	C	C format is numeric. It is a monetary amount. It must be a whole number. Insurer to round down. Complete this box only when the event is a whole assignment, category of event 4. The entry is the value of all sums or benefits of a capital nature, other than one attributable to a person’s disability, paid or conferred under the policy before the happening of the chargeable event. It includes such sums or benefits paid under policies related (defined section 491(6)) to the policy existing at the time of the chargeable event.
Value of parts previously assigned	CHAR 8	C	Format is numeric. It is a monetary amount. It must be a whole number. Insurer to round down. Complete this box only when the event is a whole assignment, category of event 4. Enter the aggregate of the surrender values previous part assignments would have had if the parts assigned had instead been surrendered. When aggregating the value of any previous part assignments, do not include those for no money or money’s worth made on or after 6 April 2001.
Capital elements paid on account of annuity	CHAR 8	C	Format is numeric. It is a monetary amount. It must be a whole number. Insurer to round down. Complete this box only when the event is a whole assignment, category of event 4. Enter the aggregate of capital elements included in any payments previously made on account of an annuity.
Number of policyholders	CHAR 3	M	The number of ‘appropriate policyholders’ as defined in section 552(10). Right justify pad with zeros or spaces.
Type of 3 record count	CHAR 3	M	The number of type 3 records associated with this chargeable event. Right justify pad with zeros or spaces.

3.9.3 Type 3 record — policyholder information

Data item name	Format	Type	Notes
Record type	CHAR 1	M	Value ‘3’
Structured name	CHAR 1	M	‘Y’ if policyholder’s name is held in a structured format such as, titles are supplied in the policyholder title field, forenames initials are supplied in the policyholder in forenames field and surname only is supplied in the policyholder name field. ‘N’ if policyholder’s name is not in a structured format, such as, the insurer holds the name in a free text field, for example, titles, forenames and surname are held together. In this case the complete name is put in the policyholder name field.
Naming convention	CHAR 2	M	’00’ if structured name is set to ‘Y’. See Appendix D paragraph 8.3 for other values to use when structured name is set to ‘N’.
Policyholder title	CHAR X	O	Titles of the policyholder. For example, Mr or Mrs or Ms or Doctor, and so on. Provide a space between titles if more than one title is provided for a policyholder. Left justify pad with spaces.
Policyholder forenames	CHAR X	O	Forenames or initials (or both) of the policyholder. Space initials if initials are provided. Left justify pad with spaces.
Policyholder name	CHAR X	M	Surname of the policyholder if structured name field is set to ‘Y’. Full name of the policyholder if the structured name field is set to ‘N’. Left justify pad with spaces.
Policyholder address	CHAR X	M	The permanent residential address of the policyholder, including policyholder postcode if policyholder postcode supplied field is set to ‘N’. Left justify with spaces.
Policyholder postcode	CHAR 8	O	Postcode for the above address if policyholder postcode supplied field is set to ‘Y’.

3.9.4 Type 4 record — control count

Record type	CHAR 1	M	Value ‘4’
Chargeable event count	CHAR 11	M	The count of all the chargeable events (type 2 records) submitted in this batch which will be used to ensure the integrity of the received batch. Right justify pad with zeros (pad with spaces allowed).

Question 4

4.  Guidelines for acceptable media

Accepted Answer

4.1 Media submissions are no longer accepted.

4.1.1 Format

Files must be encoded in UTF-8 as per ISO 20022 (ASCII), unless you’re using the latest version of the HMRC chargeable events spreadsheet from GOV.UK.

4.1.2 Content

The content of the file should conform to the chargeable event report format as defined in the electronic flat text file specification unless you are using the latest version of the HMRC chargeable events spreadsheet from GOV.UK.

4.1.3 Naming

You should label all files you send whether by SDES or email where the event occurred in the same tax year in the format: HMRC Ref_Sub number_Batch number_Total number of batches_Year

Example

C9876_03_001_001_2018

Item name	Item label
1. HMRC reference	C9876
2. Sub number	03
3. Batch number of the file for that reference/sub number/year	001
4. Total number of batches being submitted on this occasion for that reference/sub number/year	001
5. Year	2018

All 5 items are required to allow us to process the file correctly.

Each file needs its own name so that we can identify it. Do not zip files together or in groups. Without the correct information we will not be able to process the data.

To avoid the return being rejected or queried you must always use the above file naming convention. For example, if a financial institution with the HMRC reference C9876/03 sends in two batches for 2018, the files (batches) would be labelled:

Batch number	Batch name
Batch 1	C9876_03_001_002_2018
Batch 2	C9876_03_002_002_2018

If the return was a single file (batch) it would be: C9876_03_001_001_2018.

Question 5

5.  Data security and encryption

Accepted Answer

5.1 Your responsibilities under the Data Protection Act 1998

In the light of the Information Commissioners recent advice, we encourage everyone to be this careful when transferring information to us. We do not set any particular security standards for data coming to us from businesses but are happy to work with anyone who needs to send us data to help secure it. Under the Data Protection Act you are responsible for the security of personal data until we have received it.

5.2 The latest advice on security and encryption

For the most up to date advice on how to send your certificates and permitted encryption email: da.enquiries@hmrc.gov.uk.

Question 6

6.  Data content

Accepted Answer

All data must be encoded in ASCII or UTF8 (multibyte) character sets.

Question 7

7.  Allowable character set

Accepted Answer

Data must use the same character set.

Only the following characters are allowable:

Upper case alphabet A to Z
Lower case alphabet a to z
Numbers 0 to 9
Oblique /
Hyphen -
Ampersand &
Full stop .
Apostrophe ‘
Comma ,
Left hand parenthesis (
Right hand parenthesis )
Space

Numeric data must be expressed as digits and as printable characters, for example, number 12 should be expressed as character 1 and character 2.

Where fractions of numbers are being reported, these should be expressed in decimal and as printable characters, for example, 1.25 should be expressed as character 1, character ., character 2 and character 5.

It is vital that the following characters are not supplied:

Asterisk *
Semi-colon ;
Vertical bar |

7.1 Use of multibytes (foreign characters)

In UTF8, accented characters such as é and umlauted characters such as ü are stored as multiple bytes of data. They are multibyte characters, which should count as a single character for creating your return.

The rule about counting characters and not bytes applies to all types of encoding.

If you use UTF8 when compiling your return, you must count multibyte characters as a single character. This is to avoid your return failing processing and a resubmission request.

Question 8

8.  Introduction

Accepted Answer

This section is applicable only to those fields where names are supplied as free format text (unstructured).

Why you need to give a naming convention code

HMRC need to determine for entries in a free format field the order of the elements in the name, so that during processing HMRC can interpret the data and utilise it effectively.

Which code you should use

This should be indicated by the 2 digit numerical code that matches your data. The acceptable code numbers are shown in paragraphs 9.1 and 9.2.

Type 3 record — policyholder naming convention

Where no policyholder name or title has been supplied enter the code 00 (numeric zero’s) in the account naming convention field.

8.1 Notes on policyholder information

If relevant, insurers must supply information for the suitable policyholder including:

title
forenames
surname
full address including postcode

8.2 Structured name set to ‘Y’

The insurer holds the policyholder’s name for this chargeable event in a structured format. Supply ‘00’ in naming convention field.

8.3 Structured name set to ‘N’

The insurer holds the name of the policyholder in an unstructured format. The full name will be supplied in the policyholder name field. The naming convention field is used to determine how HMRC will interpret the free format name supplied in the policyholder name field.

8.4 Naming convention

This will be set to the following, depending on how the name will be supplied:

00
the policyholder name is provided in a structured format in the title, initial or forename and surname fields

01
title(s) forename(s) surname for example, Mr John Adam Smith

02
surname forename(s) title(s) for example, Smith John Adam Mr

03
surname title(s) forename(s) for example, Smith Mr John Adam

04
forename(s) surname for example, John Adam Smith

05
surname forename(s) for example, Smith John Adam

06
title(s) surname forename(s) for example, Mr Smith John Adam

Forenames may contain initials or may not even be present — if the format is indeterminate, then supply ‘01’.

Question 9

9.  Type 1 record

Accepted Answer

9.1 HMRC insurer reference

The prefix is the number provided to the insurer by HMRC for the purposes of submitting Chargeable Event Certificates and is the format A9999. The ‘/99’ is the sub report number (‘01’ to ‘99’) to enable the insurer to report from different systems or reports from regional based systems. If an insurer only requires one value, then the automatic default setting is ‘/01’. If additional numbers are required follow instructions at paragraph 2.3.

9.2 Insurer name

This is the name of the insurer submitting the report.

9.3 Batch number

This is a sequential number generated by the insurer. The number sequence is specific to each insurer reporting system (denoted by the HMRC insurer reference and sub-report number) and allows unique identification for the batch.

Question 10

10.  Type 2 record

Accepted Answer

10.1 Policy number

Insurers must report this for every gain. It is the unique identifying designation given by the insurer to the policy or contract. Insurers may aggregate the details from more than one policy where the nature and date of the event are the same in respect of each policy and where the policy numbers are the same apart from a sub-designation for example, the whole surrender of 6 policies AB1234567/1, AB1234567/2 and so on, could be included on 6 individual certificates or all amounts could be amalgamated and shown on one certificate with the policy number shown as AB1234567/1-6.

10.2 Currency code

The 3-character field is for the SWIFT code of the currency in which the insurer reports details of all monetary amounts. The default setting is the currency of the UK. Insurers may space fill the field if the certificate is completed in the currency of the UK.

The insurer may complete the certificate using the currency in which the policy is denominated if this is not the currency of the UK. In this case the insurer must complete the field with the appropriate SWIFT code.

10.3 Chargeable event type

Insurers must report this for every gain. The entry should be a number to denote the category of event, set out as follows:

1 — Death.
2 — Maturity.
3 — Surrender including fundamental reconstructions of the contract, such as change of life or lives assured.
4 — Whole assignment for money or money’s worth.
5 — Part surrender to which section 498 applies — see the following table.
6 — Part surrender to which section 509 applies — see the following table.
7 — Part assignment for money or money’s worth.
8 — Yearly gain on personal portfolio bond.

Policy loans within section 548 are treated as if they were part surrenders. Insurers should report loans which are chargeable events as category of event 5 or 6 as appropriate, applying the rules, which are set out in the following table, to the loans as if they were part surrenders.

Description	Code number for chargeable event part surrender	Notes (about part surrenders only)
Part surrender (but nothing else).	5	Test under section 498. If there is an ‘excess’ — single chargeable event at end of policy year.
Several part surrenders (but nothing else).	5	Test under section 498. If there is an ‘excess’ — single chargeable event at end of policy year.
Assignment (full or part) by way of gift followed by one or more part surrenders later in policy year.	5	Test under section 498. If there is an ‘excess’ — single chargeable event at end of policy year.
One or more part surrenders before or after full assignment for money or money’s worth.	5	Test under section 498. If there is an ‘excess’ — single chargeable event at end of policy year.
Part surrender and part assignment for money or money’s worth in the same policy year (in either order).	6	Test under section 509. May be a chargeable event occurring at the time of the part surrender.
Several part surrenders and a part assignment for money or money’s worth at any time in the year.	6	Test under section 509. Each part surrender may be a separate chargeable event occurring at the time of the part surrender. Two or more part surrenders with no intervening part assignment may be reported on one certificate.
Part surrender followed by an assignment (part or full) by way of gift.	6	Test under section 509. If a chargeable event, event occurs at time of the part surrender.
Several part surrenders, including at least one before an assignment by way of gift part way through policy year.	6	Test under section 509. Each part surrender may be a separate chargeable event occurring at the time of the part surrender. Two or more part surrenders with no intervening part assignment may be reported on one certificate.

10.4 Date of chargeable event

Insurers must report this for every gain. The entry here is the date on which the event occurred. This is generally the date on which the transaction giving rise to the event took place. If more than one part surrender is reported on the same certificate under section 552ZA (3), insurers should report the date of one of the part surrenders which it is reporting.

The exceptions to this are when the event is:

a part surrender with neither a part assignment for money or money’s worth during the year, nor a later part or whole assignment otherwise than for money or money’s worth later in the year (category of event number 5)
the occurrence of a yearly gain on a personal portfolio bond (category of event number 8) — in these cases the date of the event is the last day of the year as defined in section 499

The date should be included in the format DDMMCCYY.

10.5 Date on which policy year ends (defined in section 499)

An entry is needed here when the event is either a part surrender falling within category of event number 6 (see table in section 10.3) or a part assignment for money or money’s worth (category of event number 7).

In these cases, in addition to reporting the date of the event, the insurer must enter in this field the policy year end date for example, the day before the next anniversary of when the policy was made.

The date should be included in the format DDMMCCYY.

10.6 Number of years

Insurers must report this for every gain. Where the period a policy has run, or the period since the last event, is less than one year, this box should be completed by entering the number 1.

For death, surrender, maturity and whole assignment (categories of event 1 to 4), and the first part surrender or part assignment in relation to a particular policy or contract that is an event in categories of event 5 to 7, this is the number of complete years the policy or contract has run from when it was taken out to the date of the event or, for part surrenders and part assignments, to the end of the policy year end in which the surrender or assignment took place.

For part surrenders and part assignments (in categories of event 5 to 7) of a policy that is not a new non resident policy or an Overseas Life Assurance Business (OLAB) contract made on or after 17 March 1998, other than the first such surrender or assignment in relation to the policy or contract, it is the number of complete years the policy or contract has run from the end of the policy year in which the most recent earlier event occurred until the end of the policy year in which the surrender or assignment took place.

For part surrenders and part assignments (in categories of event 5 to 7) of a new non-resident policy or an OLAB contract made on or after 17 March 1998, this is the number of complete years the policy has run from when it was taken out to the end of the policy year in which the part surrender or assignment took place.

For gains arising on Personal Portfolio Bonds (in category of event 8), the entry must always be 1.

The number of years a policy of life insurance has run is measured from the date the earliest related policy was taken out. By ‘related policy’ is meant any policy in respect of which a later policy has been issued in substitution for, or in respect of which a later policy has been issued in consequence of an option conferred by another policy.

10.7 Amount of chargeable event gain

This is the amount of the gain calculated in accordance with:

section 491 and 507 for life insurance policies and capital redemption policies where the chargeable event falls into category of event number 1 — 3 and 5 above
section 491 and 507 for contracts for life annuities where the chargeable event falls into category 1 — 3 and 5 above
section 511 where the chargeable event is in category of event number 6 of 7 above
section 522 where there is a yearly gain for a Personal Portfolio Bond in category of event number 8 above

The amount of the gain to be reported is the amount without any reduction which might be due for periods during which the policyholder was not resident (relief under section 553(3)), which may be available in connection with new non-resident policies and with OLAB contracts made on or after 17 March 1998.

No entry is required here if the chargeable event is a whole assignment (category of event 4).

10.8 Income Tax treated as paid

Insurers must report this for every gain. The gains from most, but not all, policies and contracts with UK insurers are chargeable to tax as if Income Tax at the basic rate had already been paid on the amount of the gain. The types of policy and contract issued by UK insurers which do not entitle a policyholder who is an individual or a trustee to be treated as having suffered basic rate tax on the amount of the gain are:

policies of life insurance and contracts for life annuities made by a friendly society in the course of tax exempt life or endowment business
contracts for life annuities made after 26 March 1974 but in an accounting period of the insurance company beginning before 1 January 1992
policies of life insurance that form part of the OLAB of an insurance company or friendly society made on or after 17 March 1998, or varied (and for this purpose any exercise of rights conferred by the policy shall be regarded as a variation) on or after 17 March 1998 so as to increase the benefits secured or to extend the term

Insurers should complete this box on the assumption that the person chargeable to tax on the gain is an individual, even if the holder of the policy is a company. A company is not entitled to be treated as if basic rate tax has been paid on a gain it makes.

Enter Y for yes and N for no.

Amount of Income Tax treated as paid

The amount of Income Tax treated as paid is the amount of the gain multiplied by the basic rate for the relevant year. The relevant year is the year of assessment to which the gain is attributable.

When completing this field, the insurer may assume that the person chargeable to tax on the gain is an individual. The relevant year of assessment to which a gain is attributable is the year of assessment in which the event was treated as arising, this includes the end of the policy year (as defined section 499) in which any part surrender or assignment took place.

No entry is required here if the chargeable event is a whole assignment (category of event 4) or if the entry in the field ‘Income Tax treated as paid’ is ‘N’.