Beta This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

Capital Gains Manual

Life insurance policies/deferred annuities: exemption for second hand policies: disposals from 9 April 2003: exclusions from the exemption: actual consideration

For the purposes of TCGA92/S210, in relation to disposals on or after 9 April 2003, ‘actual consideration’ is, with two exceptions, any consideration other than consideration that is deemed to be given for the purposes of Capital Gains Tax. The two exceptions are as follows.

Firstly, the amounts paid under the terms of a life insurance policy by way of premiums, or under the terms of a deferred annuity contract (whether as premiums or a lump sum), do not count as ‘actual consideration’ - TCGA92/S210 (4).

Secondly, TCGA92/S210 (5) provides that in three circumstances any consideration given on a transfer of the rights conferred by a policy, or an interest in those rights, does not count as ‘actual consideration’. The circumstances are as follows:

  • If the consideration is given on a transfer between companies such that TCGA92/S171 (1) applies, so that there is no gain or loss on the disposal (see CG45305+);
  • If the consideration is given by a man to his wife, or vice versa, or by one civil partner to his or her civil partner, whether or not TCGA92/S58 (1) (see CG22000) applies;
  • If the consideration is given on a disposal that is an ‘approved post-marriage disposal’ or an ‘approved post-civil partnership disposal’.

TCGA92/S210 (6) sets out the circumstances in which a disposal is an ‘approved post-marriage disposal’ or an ‘approved post-civil partnership disposal’. The disposal must be made by an individual to their former spouse or civil partner in consequence of the dissolution or annulment of a marriage or civil partnership and duly authorised by an appropriate court, or similar body. The rights or interest transferred must have been held by the person making the disposal immediately before the marriage or civil partnership was dissolved or annulled. So if a life insurance policy is taken out after the marriage or civil partnership has ended and this is subsequently transferred as part of a consequential settlement any actual consideration given is not disregarded.

As regards the treatment of a policy assigned in pursuance of a pension scheme, see CG67691.