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HMRC internal manual

Insurance Policyholder Taxation Manual

HM Revenue & Customs
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Certificates for HMRC: circumstances where certificates need to be provided

Insurers must also provide information about chargeable events and gains to HMRC, but only where the gain is larger than a certain amount, or where the chargeable event is a whole assignment. Exceptionally, an officer of Revenue and Customs may also specifically require a certificate to be provided to HMRC in other cases - see IPTM7155.

Reporting chargeable events other than whole assignments - only required where gain exceeds half the ‘basic rate limit’

Chargeable event certificates must be supplied by the insurer to HMRC where the value of the gain, when aggregated with any connected gains, exceeds half the ‘basic rate limit’. IPTM7150 explains what is meant by connected gains.

The basic rate limit is defined in ITA07/S10 (2). It is the amount of taxable income up to which a taxpayer is chargeable at the basic rate. For the tax year ended 5 April 2011, half the basic rate limit is £18,700.

Although insurers are not required to report gains to HMRC which are equal to or less than half the basic rate limit, they may wish as an administrative convenience to send details of all gains to HMRC, perhaps as part of the process that produces certificates for policyholders. There is no objection to this, so long as the information is provided by way of magnetic media meeting the standard specification - see IPTM7160 - and not on paper.