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HMRC internal manual

Insurance Policyholder Taxation Manual

From
HM Revenue & Customs
Updated
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Personal portfolio bonds: meaning: property selection

A policy or contract is not a personal portfolio bond merely because its terms permit the selection of property as described at IPTM3610 if all of the property which may be selected

  • falls within the following categories - property categories 

    • property appropriated by the insurer to an internal linked fund
    • units in an authorised unit trust, see CTM48125 
    • shares in an approved investment trust, see CTM47000 onwards
    • shares in an open-ended investment company, see CTM48305 
    • cash
    • a life policy, life annuity or capital redemption policy, unless excluded 
    • interests specified below in collective investment schemes, see CTM48060, and
  • meets either the general or class property selection conditions

general condition: property meets this condition if, at the time when it may be selected, the opportunity to select property falling within the same category is available to

* all policyholders of the insurer, or
* persons acting on behalf of those policyholders

class condition: property meets this condition if, at the time when it may be selected, the opportunity to select property falling within the same category is available to

* a particular class or classes of policyholders of the insurer
* persons acting on behalf of the members of that class or those classes.

The meaning of class for this purpose is given at IPTM3630.

A life policy, life annuity or capital redemption policy is ‘excluded’ if

  • the policy or contract is itself a personal portfolio bond
  • the value of any benefits under the policy or contract is determinable directly or indirectly by reference to a personal portfolio bond
  • a personal portfolio bond is property related to the policy or contract.

Cash includes sums in bank or building society accounts, but not cash that is acquired in order to realise a gain on its disposal.

Specified interests in collective investment schemes are in the main units in non-UK unit trusts. Interests in non-UK investment trust companies are excluded, as ‘closed-ended’.

More detailed guidance, aimed largely at insurers and practitioners, is given at IPTM7700 onwards.

Further reference and feedback IPTM1013