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HMRC internal manual

Insurance Policyholder Taxation Manual

HM Revenue & Customs
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Calculating gains: part surrenders and part assignments: ‘periodic calculations’ and ‘excess events’: guaranteed income bonds

There is background on guaranteed income bonds at IPTM1420. Payments by an insurer are treated as ‘income payments’ under a guaranteed income bond contract if the following conditions apply

  • the payment would, but for the guaranteed income bonds provision at ITTOIA05/S504 (6), be treated as interest or an annual payment
  • the payment is a sum paid, or payable, under provisions of the contract that are of a life insurance character
  • the payment does not constitute late payment interest.


Such ‘income payments’ are treated as arising from 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. See IPTM3400.

Late payment interest means interest on a sum payable under the contract which is paid for a period beginning with the occurrence as a result of which the sum is payable and ending when the sum is paid.

Further reference and feedback IPTM1013