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HMRC internal manual

Capital Gains Manual

Insurance: risks of damage/loss/depreciation of assets

Before 20 December 1974, the rights of the insured under a policy (except a life insurancepolicy) were not chargeable assets. As a result it was possible, as in the case of CIR vMontgomery (49TC679), for the insured to avoid liability on capital gains on an insurancerecovery by assigning his/her right to it (for example, for an amount equal to thecompensation). With effect from 20 December 1974, this position was remedied: the rightsof the insured under a policy of insurance for damage to, or loss or depreciation of,assets are to be treated as chargeable assets to the extent that the insured assets arethemselves chargeable assets.