Certificate for HMRC: connected gains
The inclusion of connected gains in establishing the total gain for reporting purposes is an anti-fragmentation rule. It is to ensure that policyholders who make a number of gains from identical policies with the same insurer in the same year of assessment do have their gains reported to the HMRC. This rule only applies to genuine cluster policies.
A gain is ’connected with’ another gain if
* the insurer and policyholder are the same * both gains are attributable to the same year of assessment * the terms of the policies or contracts are the same apart from any difference in their maturity dates and * the policies were made on the same date. Where there is a partial change of policyholder during the year, for instance from A and B jointly to A solely, then gains before and after the change in the same year are not connected. This is because the policyholders are not identical, although A is a policyholder before and after the change. The threshold operates separately for each of the appropriate policyholders during the year - A and B jointly, B as assignor of his share to A, and A solely.
See IPTM7230 for guidance on reporting chargeable events and gains on policies within a cluster of identical policies.
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