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HMRC internal manual

Capital Gains Manual

Life insurance policies/deferred annuities: when are the rights conferred 'chargeable assets'

The rights conferred by a life insurance policy are incorporeal property and so, by virtue of TCGA92/S21 (1) - see CG12010, assets for the purposes of Capital Gains Tax. The rights of the insured under many policies of insurance are taken outside the scope of Capital Gains Tax by TCGA92/S204 (1). But as CG69040 explains, it is not intended that the gains on disposals of life insurance policies should be exempted from Capital Gains Tax in all circumstances. So TCGA92/S204 (4) excludes life insurance policies from the general exemption of TCGA92/S204 (1).

Instead gains on life insurance polices may be exempted from Capital Gains Tax by TCGA92/S210. Subsection (1) defines the scope of TCGA92/S210 and provides that the section has effect in relation to any

  • policy of insurance, or
  • contract for a deferred annuity

on the life of any person.