IPTM7510 - Calculation of gains: full surrender, maturity, death or whole assignment

The chargeable event gain on a full surrender, maturity, death or whole assignment for money or money’s worth and, on life annuities, the taking of a capital sum as a complete alternative to annuity payments, is calculated as TB – TD – PG, where:

  • TB is the total benefit value of the policy or contract
  • TD is the total allowable deductions, and
  • PG is the total of gains arising on calculation events before the current event.

These terms are explained at IPTM3510.

Position following recalculations of disproportionate gains arising on previous part surrenders

Where an officer of HMRC has recalculated a prior gain on a just and reasonable basis, following the process set out at IPTM3596, the calculation of gains on full surrender, maturity, death or whole assignment will differ from the insurer’s records. Where a disproportionate gain is recalculated, insurers are not required to amend or reissue certificates. It is important that policyholders maintain sufficient records to ensure that they calculate and report the taxable gain correctly.