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HMRC internal manual

Inheritance Tax Manual

Life Policies: policy based on the life of another not connected with any other transaction (except a trust): procedure

If the deceased owned, or had an interest in, a policy on the life of another person, you will need to consider the questions below

Did the deceased have a qualifying interest in possession (IHTM16062) in the policy?

If the answer is no, refer the file to Technical confirm the extent of any claim.

If the answer is yes-

Does the interest pass to an exempt beneficiary?

If the answer is yes, treat the interest in the policy as exempt - no further queries arise.

If the answer is no-

Has a value of been returned for the policy?

If not, ask the taxpayer to forward a letter from the insurance company stating the surrender value of the policy.

If a value has been returned, or when the letter from the insurance company is provided

Is the policy a with-profits policy (IHTM20105)?

If not, accept the value returned is the open market value (IHTM20083). If you are in any doubt, refer to the Actuarial Team for advice.

If it is-

Is the value returned for the policy £20,000 or more?

If not, accept the value returned is the open market value (IHTM20083)

If it is, refer the value to the Actuarial Team who will advise on the value to be included.