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HMRC internal manual

Capital Gains Manual

Life insurance policies/deferred annuities: compensation for mis-sold life insurance policies

Some holders of life insurance policies may receive compensation because they were mis sold, or given incorrect information about, the life insurance policies they took out. No chargeable gain arises on compensation received in these circumstances provided the policy on which it is paid is within the exemption of TCGA92/S210 (2) described at CG69042 and 69050 (if the compensation is received on or after 9 April 2003) or CG69055 (if the compensation is received before 9 April 2003). This is because Extra Statutory Concession D33 (see CG13010+) applies.