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HMRC internal manual

Insurance Policyholder Taxation Manual

Calculating gains: death, maturity or full surrender: qualifying endowment policies held as security for company debts

Where the chargeable event is death, maturity or full surrender, and immediately before the happening of the event

  • the policy was a qualifying endowment policy, IPTM3310, held as security for a debt owned by a company subject to the detailed conditions below
  • the amount of the debt is greater than the sum of premiums paid to date
  • the company makes a claim within two years of the end of the accounting period in which the chargeable event occurs

then the amount of the debt is substituted for the premiums paid in computing total deductions.

The company debt conditions are

  • throughout the policy period, the policy rights were held as security for a debt owed by the company
  • the capital sum payable under the policy on death is at least the amount of debt when the insurance was made
  • any sum payable under the policy as a result of the event is, so far as possible, applied in repaying the debt
  • the borrowing was applied for the purposes of

    • purchasing an interest in land to be occupied by the company for the purposes of its trade
    • constructing, extending or improving, not repairing or maintaining, buildings occupied for the purposes of its trade.

If the debt is incurred to repay another debt, both count as debts for the above purpose.

Further reference and feedback IPTM1013