Certificate for policyholder: requirement to provide a certificate and person to whom it must be delivered
Requirement to provide certificates to policyholders
When a chargeable event occurs the insurer must provide a certificate to the ’appropriate policyholder’ - see IPTM7110 - specifying certain information about the event and the gain unless the insurer is satisfied that no gain arises on the event. This might be because, for instance, on the surrender of the policy, total benefits paid over the life of the policy are less than the premiums paid. The onus falls on the insurer to be satisfied that no gain arises. It is not possible for an insurer to be satisfied that no gain arises on an assignment for money or money’s worth unless it knows the value of the consideration on the assignment. But in considering whether a gain might have arisen an insurer does not need to take into account any commission rebated to the policyholder or reinvested as premium - see IPTM7530.
Where the policyholder is a company see IPTM7107.
A single certificate may be used to report chargeable events on policies within a cluster of identical policies that have the same transaction history - see IPTM7230.
Policyholder not necessarily the same as the taxable person
The policyholder or policyholders are the legal holders of the policy or contract and in most cases they will also be the same as the persons who are taxable on any gains. However, this is not necessarily the case, for instance where the beneficial owners of rights under a policy are different to the policyholders. Where a policy is held on trust, the policyholder is the body of trustees.
The reporting regime requires insurers to provide information to policyholders because insurers will always know the identity of the policyholder. But insurers will not necessarily know who is the chargeable person, for instance in most cases where the policy is held on trust, and they are not required to establish this information. Even if the insurer is aware of the taxable person, who is different from the policyholder, for instance the settlor of a trust whose trustees hold the policy, they are still required to send any chargeable event certificate to the policyholder.
More than one policyholder
Where there is more than one appropriate policyholder, the insurer is required to deliver a certificate to each of those policyholders except where it has not been provided with an address for that policyholder. Each certificate should have the names of all the policyholders on it. Where one of the appropriate policyholders is deceased and the insurer has chosen to send a certificate to the personal representatives for reasons of sensitivity - see IPTM7110 - then it should separately also send certificates to the surviving appropriate policyholders.
Joint policyholders living at same address
Where there are joint policyholders, and the insurer knows that they both live at the same address, for instance a husband and wife, this requirement can be satisfied by the insurer by sending only one certificate to that address with both names on it.
Trustees of a trust and personal representatives of an estate
When a policy or contract is held on trust, the policyholder is the body of trustees. If there is more than one trustee then the insurer only needs to send a chargeable event certificate to the first named trustee, or to whichever trustee it holds an address.
Similarly, where a gain arises on a policy held in the estate of a deceased individual, the insurer only needs to send one certificate to the first named personal representative of the estate, or to one for which it has an address.
Further reference and feedback IPTM1013