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HMRC internal manual

Capital Gains Manual

Insurance: Chargeable Events legislation

The `Chargeable Events’ legislation, see IPTM3000+, takes priority over the charge to Capital Gains Tax, because TCGA92/S37 results in the disposal consideration only being taken into account for Capital Gains Tax purposes to the extent that it is not charged to Income Tax as income of the person making the disposal. Sums received under policies of life insurance, contracts for life annuities and capital redemption policies may be taxable under the Chargeable Events legislation. The charge arises on `Chargeable Event Gains’, which are calculated broadly as the difference between the premiums paid and benefits received. Chargeable Event Gains are liable to Income Tax. The Chargeable Event measure of gains is not the same as the Capital Gains Tax measure.

IPTM3500+ explains the basis of computation of Chargeable Event Gains. See CG69061+ for the computation of the gain or loss accruing on a disposal of the rights conferred by a life insurance or other contract when the disposal also gives rise to a Chargeable Event Gain.