IPTM1520 - Outline of the chargeable events regime: focus on the policy, calculate the gain and attribute it

The computational provisions focus on the policy and its history, including, in the case of a policy acquired by assignment, factors arising from partial surrenders or assignments that took place during the pre-acquisition period.

In general, each policy is considered separately under the chargeable events regime, even if it is sold as part of a package or cluster. It is only when gains are attributed to persons for taxation purposes that they are, where appropriate, brought together.

Where policies are issued on different terms to those that would have been the case had the policies not been linked, ITTOIA05/S473A requires the ‘connected’ policies to be treated as a single policy. These rules apply to policies made on or after 21 March 2012 (or if made earlier varied, assigned or if part of the rights become held as security for a debt after this date). Policies are connected if:

• they are simultaneously in force
• one is issued with reference to the other or with a view to enabling the issue of the other, and
• the terms on which either is issued differ significantly from those expected if that policy were to have been issued in isolation.

The only other exception to the general rule is for ’related policies’, where one policy is replaced by another, for example on the exercise of a maturity option. See IPTM3525 for more information about related policies.

The chargeable events regime works by:

• identifying a ‘chargeable event’
• calculating the gain arising
• attributing the gain to a chargeable person.