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HMRC internal manual

Insurance Policyholder Taxation Manual

Person liable to charge: individuals and companies


An individual is chargeable under the chargeable event regime if UK resident in the tax year in which the gain arises and

  • the individual beneficially owns the rights under the policy or contract
  • the rights under the policy or contract are held on non-charitable trusts which the individual created, or
  • the rights under the policy or contract are held as security for the individual’s debt.


The question of domicile is irrelevant in the context of the chargeable event regime. Gains are chargeable under the rules without regard to whether proceeds have been remitted to the UK.

Beneficiaries under a trust have an interest but, unless the trust is a bare trust, do not beneficially own the rights. There is more on the treatment of policies and contracts held on trust at IPTM3250.

An individual is not liable to tax under the chargeable event regime on any gains arising in any tax year or accounting period in which it is not UK resident. This rule does not apply to

  • the charge on a UK branch of a non-UK resident company
  • the special provision which applies ICTA88/S740 where assets have been transferred abroad, and the rights of the policy are held by a non-UK resident trust or a foreign institution, see IPTM3260.


The rule does not affect the charge on UK resident trustees where the policy is held on trust and the settlor is non-UK resident, see IPTM3230.

Where an individual is charged as creator (or settlor) of a non-charitable trust, that person may recover the tax from the trustees. If so, HMRC must certify the amount recoverable. The HMRC office should send the following details to CT&VAT (Technical) Insurance Group (see ‘Technical Help’ link on left hand bar) in order for certification to be made:

  • name and address of the taxpayer
  • name of the trust concerned
  • amount of the chargeable event gain, and
  • the additional tax charged as a result of the chargeable event gain.


Separate details must be provided for each policy, year and trust concerned. The tax recoverable is limited to that relating to the sums or benefits received by the trustees under the chargeable event.

Section 11 of the Married Women’s Property Act 1882, and equivalent Scottish and Northern Ireland legislation, provides that a trust is created automatically where a policy of assurance is expressed to be for the benefit of spouse and children. The insured may appoint trustees of the benefits payable but, if not, the policy vests in him or his personal representatives as trustees. ITTOIA05/S465 (6) ensures that the normal rule relating to trusts created by an individual applies in these circumstances, even though the trust is created by operation of law. In most cases the charge will be on the creator - see IPTM3250.

Companies - Accounting periods starting before 1 April 2008 only

For accounting periods starting before 1 April 2008, rules similar to those described above for individuals also apply to companies. The loan relationships rules apply to companies for later accounting periods - see IPTM3900 onwards.

Further reference and feedback IPTM1013