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HMRC internal manual

Insurance Policyholder Taxation Manual

From
HM Revenue & Customs
Updated
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Assignments from 6 April 2013

ICTA88/SCH15/PARAB2

General Rule

If the rights (or any share in the rights) under a qualifying policy are assigned to someone else before 6 April 2013 there will be no change in the status of the policy in the hands of the assignee so it will remain a qualifying policy.

If the rights (or any share in the rights) under a qualifying policy are assigned to someone else on or after 6 April 2013 the policy will automatically become a non-qualifying policy apart from certain exceptions.

For these purposes the assignment of legal as opposed to beneficial ownership is ignored.

Exceptions

The following assignments are excluded from the general rule applying to assignments after 6 April 2013. These assignments also require a statement to be made (see IPTM2090):

  • assignments as part of a divorce settlement or dissolution of a civil partnership
  • assignments as a result of a court order
  • assignments as security for a debt or on discharge of a debt
  • assignments between husband and wife and between civil partners
  • assignments into or out of a trust
  • assignments to the personal representatives of a deceased individual or as a result of a deceased beneficiary event (see below).

The following assignments have no impact upon a policy’s qualifying status (and do not require a statement to be made - see IPTM2091):

  • Assignments as a security for a debt or on discharge of a debt.
  • Assignments as part of legally enforceable obligation relating to a divorce or dissolution of a civil partnership if the policy assigned is to pay off an interest only mortgage.
  • Assignments to personal representatives of a deceased individual.
  • Assignments following the death of an individual if the beneficiary was a already a beneficiary prior to death.
  • Assignments of legal ownership where beneficial ownership does not change.

In the instances noted under the first set of bullets above, for the purposes of the annual premium limit, the assignee must consider the assigned policy together with all his/her other qualifying policies already subject to the annual premium limit rules.

This means that he/she must aggregate the total annual premiums payable in respect of existing qualifying policies that count towards the annual premium limit.

If the premiums payable under the assigned policy, when aggregated with the assignee’s other qualifying policies, do not lead the assignee to breach the annual premium limit of £3,600 the assigned policy will remain a qualifying policy in the hands of the assignee.

If the premiums payable under the assigned policy, when aggregated with the assignee’s other qualifying policies lead the assignee to breach the annual premium limit of £3,600 the status of the assigned policy will be as follows:

  • a qualifying policy issued on or after 6 April 2013 will become non-qualifying
  • a qualifying policy (whether RRQP or not) issued on or after 21 March 2012 and before 6 April 2013 will become non-qualifying
  • a qualifying policy issued before 21 March 2012 will become a RRQP.