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HMRC internal manual

Insurance Policyholder Taxation Manual

HM Revenue & Customs
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Assignments of policies on divorce or on dissolution of civil partnership: current position

It is not uncommon for all or part of the rights under a policy or contract to change hands on divorce or dissolution, for example all or part of a jointly owned mortgage endowment policy might be transferred as part of a settlement. It may also be accompanied by a change in the lives assured.

Current view of the law

Where there is an assignment by one spouse or civil partner to the other of all or part of the rights under a life insurance policy, capital redemption policy or life annuity contract under a divorce or dissolution settlement, HMRC takes the view that the assignment is not for money or money’s worth where the Court has made an Order

  • formally ratifying an agreement reached by the parties that deals with the transfer of assets including the policy or contract, or
  • for ancillary relief under the Matrimonial Causes Act 1973 (or financial provision under the Family Law (Scotland) Act 1985) which results in a transfer of rights under the policy or contract from one spouse to another.

This view follows from the judicial observations of Coleridge J. in G v G [2002] EWHC 1339.

A Court Order made in these circumstances reflects the exercise of the Court of its independent statutory jurisdiction. The transfer of ownership is not therefore the consequences of any party to the proceedings agreeing to surrender alternative rights that they might have in return for receiving rights under the policy or contract.