Foreign property: money from a life policy: policy issued at branch office
The proceeds of a policy are usually taxed where they are sited (IHTM27071).
If a policy:
- is issued by, or through, a branch office of a UK company that is outside the UK, and
- no reference is made in the terms of the policy as to the place where the policy monies are to be paid,
policy monies are to be treated as situated in the country of the branch office as long as the whole course of business in relation to the policy had been transacted in that country.
The ‘whole course of business’ means that all the following events must happen in the country of the branch office:
- The policy is issued to a resident in that country from the branch in that country.
- The holder of the policy remains resident and retains the policy there, pays the premiums to the branch there, and dies there.
- The grant of representation to the policy holder’s estate is taken out there and the proceeds are collected there.
You should not assume that the policy was situated in the UK without considering all the circumstances surrounding the policy, even if, at the date of the life assured’s death:
- the policy is in the UK at the Assurance Company’s head office, and
- the life assured has assigned the policy to the assurance company as security for a loan.
Each case must be considered on its own facts. If a small detail prevents the conditions from being fully met this may still mean that the policy is situated outside the UK. But any case where this applies, or where the locality of the policy has to be determined before the policy holder’s death must be referred to Technical.
Where a policy not made by way of deed has terms that provide for payment either at its head office or at a branch office, and the ‘whole course of business’, takes place in the country of the branch office, the monies are also treated as locally situated in that country.