When events occur: general
Events are defined in detail at ITTOIA05/S484 as follows.
Types of chargeable events that can arise
A chargeable event is
- the surrender of all rights under a policy or contract
- the assignment for value in money or money’s worth of all the rights under a policy or contract
- the maturity of a life insurance or capital redemption policy
- a death giving rise to benefits on a life insurance policy, or payment of a capital sum on a life annuity where the annuity was made on or after 10 December 1974
- an ‘excess event’ where ‘periodic calculations’ show gains, see IPTM3560
- a ‘part surrender or assignment event’ where ‘transaction-related calculations’ show gains, see IPTM3580
- a ‘personal portfolio bond event’ where annual personal portfolio bond calculations show gains, see IPTM3600
- for life annuity contracts only, the taking of a capital sum as a complete alternative to the, or further, annuity payments.
The different types of event are explained at IPTM3555.
In certain circumstances, when a loan is made in connection with a life assurance policy it is treated as a partial surrender and so a chargeable event - see IPTM3545.
An assignment not for value (or ‘money or money’s worth’), for instance an assignment by way of gift, is not a chargeable event.
Certain exceptions are set out at IPTM3410, notably in relation to qualifying policies.
Guaranteed income bonds
‘Income payments’ under a guaranteed income bond are treated as part surrenders of rights, unless the payment is the final benefit paid under the contract in which case it is treated as arising from a full surrender. IPTM1420 explains the concept of a guaranteed income bond, and IPTM3550 the types of payments regarded as ‘income payments’.
Further reference and feedback IPTM1013