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HMRC internal manual

Insurance Policyholder Taxation Manual

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HM Revenue & Customs
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Part surrenders: other events

Other events treated as part surrenders

Certain other events are treated as part surrenders for the purposes of the chargeableevent rules

  • the falling due of a sum payable as a result of a right under a policy or contract to participate in profits - this is only likely to be relevant in the case of certain older type with-profits policies where annual or reversionary bonuses become payable, even if they are not actually paid, rather than automatically reinvested to be paid on termination of the policy
  • taking a capital sum as an alternative in part to taking the annuity payments from a life annuity contract - if taken as an alternative in full to annuity payments then it is a chargeable event in its own right
  • the making of ongoing payments by an insurer under a guaranteed income bond.

Payments under guaranteed income bonds are treated as part surrenders, and the finalpayment under such a policy is treated as a full surrender. See IPTM3550and IPTM1420 for more details.

Payments to insurance advisers

Fees, charges, commissions etc. payable to a broker, investment adviser or insurerunder contract to the insurer to manage one of its funds would not normally be treated aspart surrenders. But an agreement between policyholder and insurer to make certainpayments on the policyholder’s behalf for services supplied to him under a separateinvestment agreement and funded out of his or her entitlement under the policy may be apart surrender.

Further reference and feedback IPTM1013