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HMRC internal manual

Capital Gains Manual

Insurance agents: general

Agents who are employees of certain insurance companies and friendly societies may have a financial interest in their agencies. Such an interest is known as a `book’ or `book interest’. To take over existing business, a new agent pays a capital sum to an existing agent for his `book’, either directly or through the company concerned. In addition, there may be frequent capital payments between agents on transfers of business, for example when policy holders move from one area to another.

The content of an agent’s `book’ is continually changing because of policies maturing, new policies being taken out and transfers between agents. The `book’ is nevertheless a single chargeable asset in the nature of goodwill. Reliefs are available for replacement of business assets, see CG60250+. The gain on disposal may qualify for Entrepreneurs’ Relief, see CG63950+.

This does not apply to all agents of insurance companies which operate a `book’ system: some are engaged on pure commission terms and have no personal ‘book interest’.