Valuation: interests in trusts/rights conferred by life insurance policies
A disposal of an interest in a trust which has at all times had UK resident trustees will not give rise to a chargeable gain where the person making the disposal is a person for whom the interest was ‘created by the terms of the settlement’. However, if such gains accrue in any other circumstances they may be chargeable, see CG38000+. For example, there is no gain if the original remainderman sells his or her interest to a third party. There would be a gain on the third party if they dispose of their interest or if they become absolutely entitled to the settled property.
Gains on the disposal of rights conferred by a policy of insurance or contract for deferred annuity on the life of any person are exempt from Capital Gains Tax, except where
- for disposals on or after 9 April 2003 (see CG69050), the policy or any interest in it has at any time been acquired for ‘actual consideration’ (as defined in CG69051)
- for disposals before 9 April 2003 (see CG69055), the person making the disposal is not the original beneficial owner of the policy and acquired the rights for consideration in money or money’s worth.
In such cases, any valuation which is required can be obtained from the HMRC Actuarial Advisor. The papers should be submitted to the Board’s Actuarial Advisor, HMRC Inheritance Tax, Nottingham, and the information set out in CG68963 should be supplied.