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HMRC internal manual

Insurance Policyholder Taxation Manual

Assignments: when chargeable events arise

Assignments for money or money’s worth

The assignment of all the rights under a life insurance policy, capital redemptionpolicy or life annuity contract (a ‘whole assignment’) is normally a chargeableevent if it is for money or money’s worth. Exceptions are time-served qualifyingpolicies in certain circumstances, as described in IPTM7310 andthe specific exceptions described in IPTM7365.

This only applies to assignments of the beneficial interest in the policy. An assignmentof the legal ownership only, leaving the beneficial ownership unchanged, is not achargeable event. A whole assignment not for money or money’s worth is not, and neverhas been, a chargeable event.

Meaning of ‘money or money’s worth’

‘Money or money’s worth’ has a wider meaning than simply just cash, forinstance if an individual transferred beneficial ownership of a policy to another personin return for a valuable asset then that would be an assignment for money’s worth.

In many cases an insurer will have information about an assignment which will enable it todecide whether the assignment was for money or money’s worth, for instanceaccompanying the deed of assignment, and so this will indicate whether chargeable eventcertificates need to be issued. The Stamp Duty category is not always a sound indicator ofwhether consideration has been given on the assignment because the wrong deed is sometimesused.

IPTM7370 to IPTM7385 give guidance on whether an assignment isfor money or money’s worth in certain cases, such as on divorce. In other cases, theinsurer is entitled to assume that an assignment is not for money or money’s worthunless it has information indicating that the assignment was for money or money’sworth, for instance that the purchaser of the policy is a dealer in second-hand policies.It is not required to enquire further into the nature of a particular assignment.

Where the assignment is pursuant to a court order, it is not for money or money’sworth. This is only likely to arise on divorce or separation.

Part assignments for money or money’s worth

An assignment of part of the rights (a ‘part assignment’) for money ormoney’s worth might be a chargeable event in its own right if a transaction-relatedcalculation shows a gain. Or it may give rise to an ‘excess event’. Thesequestions are considered in detail in IPTM7600 onwards.

Part assignments not for money or money’s worth

A part assignment which occurs in an insurance year beginning on or after 6 April 2001that is not for money or money’s worth, for instance by way of gift, cannot be achargeable event or give rise to an excess event.

A part assignment not for money or money’s worth that occurred in an insurance yearbeginning before 6 April 2001 may have given rise to an excess event under the pre-FA01legislation. The gain on such an event should be deducted in computing the gain on a laterfull surrender, maturity, whole assignment or death in the same way as for gains on otherexcess events - see IPTM7510 for the calculation rule.

Further reference and feedback IPTM1013